The finance behemoth U.S. Bancorp has been vigorously trialing stable digital currencies in recent months and has integrated the Stellar blockchain as an element of this strategy, it was reported.
U.S. Bancorp, operating under the designation U.S. Bank, is undertaking trials of settlements on the Stellar blockchain, as stable digital currencies are considered by the institution to be “an alternative mechanism for fund transference on a blockchain,” Mike Villano, senior vice president and head of digital asset products at U.S. Bank, conveyed during a recent podcast appearance, it was reported.
“We’re very interested to see what use cases are going to manifest from that and what customers are going to be most interested in,”
Villano said.
The continuing pilot program was initially revealed by U.S. Bancorp President and CEO Gunjan Kedia during an earnings conference call in October. At that time, she stated the bank was examining stable digital currencies in two main domains: custodial services and stablecoin settlements, yet she appended that consumer appetite for the latter was subdued, it was reported.
U.S. Bancorp Re-Enters Crypto Market Amid Easing Regulations
U.S. Bancorp is generally regarded as one of the nation’s more accommodating finance entities toward crypto-assets, having sustained a prudent yet continuous involvement in the cryptocurrency domain via its custody and foundational services, it was reported.
Initially, the financial institution was compelled to suspend its Bitcoin custodial offering for almost three years because of excessively demanding capital stipulations, and last year, supplemental supervisory pressure was encountered from the Federal Reserve regarding its digital asset vulnerability, it was reported.
Yet, as the regulatory environment underwent a change under a more digital-asset-favorable governance helmed by President Donald Trump—featuring pro-crypto advancements like the retraction of the SEC’s SAB 121 directive that mandated financial institutions to maintain capital reserves against customer crypto-assets, and the introduction of progressive lawmaking such as the GENIUS Act—the banking entity has incrementally returned to the sector, it was observed.
Last month, U.S. Bancorp stated that institutional Bitcoin custody had been reinstated following the three-year suspension, and under a month afterward, stable digital currencies were incorporated into its offerings, aligning with an increasing number of prominent financial entities undertaking comparable actions, it was reported.
“Stable digital currencies, inherently, furnish more rapid, economical, round-the-clock settlements,” Villano went on, further noting that the Stellar blockchain was selected by the bank due to its architecture prioritizing finance and supplementary degrees of oversight that satisfy the prerequisites of institutional customers, it was reported.
“We had to think about other protections around know-your-customers, the ability for online transactions, the ability to claw back transactions,”
he said.
The Stellar blockchain furnishes inherent mechanisms that enable issuers to suspend and annul asset conveyances, which was identified as a core factor why U.S. Bank elected to utilize the platform for development, it was reported.
“Often, you might write that into the business logic in itself, but in this instance you can do it at the core blockchain layer,”
Villano added.
Stellar presently occupies the 19th position based on stable digital currency market capitalization, with roughly $212 million in stablecoins being circulated on the network. Its blockchain, concentrating on payments and international transfers, has been operational since 2014, it was reported.
At present, no documentation is publicly accessible detailing when U.S. Bank’s stable digital currency project might debut or precisely how the extensive framework will be organized, it was noted.
Set Their Sights on the Stablecoin Market
U.S. Bancorp affiliates with a restricted yet expanding collection of financial institutions that have commenced vigorously investigating stable digital currency applications, particularly since the ratification of stablecoin legislation in the United States, it was reported.
Citibank is counted among the most conspicuous entities in this evolving trend, with information being disclosed as early as June that the financial institution contemplated generating its proprietary stable digital currency, and it recently chose Coinbase as its operational collaborator, it was reported.
Last month, Citi, in conjunction with other influential organizations such as Goldman Sachs and Bank of America, disclosed the formation of a consortium that will investigate and trial diverse stable digital currency applications within institutional environments, it was reported.
Given that the worldwide stable digital currency market is projected to surge dramatically in the forthcoming years, conventional financial organizations across the globe are hastening to establish the requisite infrastructure to secure a portion of the proliferating sector, it was reported.
In other European jurisdictions, nine of the area’s largest financial institutions commenced a comparable endeavor in September to probe euro-linked stable digital currency applications and regulatory authorization routes, it was reported.
