US Bancorp Explores Stablecoin Payments on Stellar Blockchain
Banking giant US Bancorp has been actively testing stablecoins in recent months and has used the Stellar blockchain as part of the plan. The bank’s efforts are part of a larger trend of traditional financial institutions exploring the potential of stablecoins for payments and other use cases.
US Bancorp, which does business as US Bank, is experimenting with transactions on the Stellar blockchain as the bank sees stablecoins as “another way to move money on a blockchain,” according to Mike Villano, senior vice president and head of digital asset products at US Bank. The bank is testing stablecoin payments and custody services on the Stellar blockchain, with a focus on exploring use cases and customer demand.
Stablecoin Market Growth
The global stablecoin market is expected to surge in the coming years, with traditional institutions around the world rushing to build the necessary infrastructure to secure a share of the expanding sector. US Bancorp joins a small but growing list of banks that have begun actively exploring use cases for stablecoins, particularly following the passage of stablecoin legislation in the United States. Other major US banks, including Citi, Goldman Sachs, and Bank of America, have also begun exploring stablecoin initiatives.
Citibank is one of the most prominent names in this movement, with reports surfacing in June that the bank was looking to issue its own stablecoin. The bank recently selected Coinbase as its operational partner and, along with other heavyweights, announced a consortium to explore and test various use cases for stablecoins in institutional environments.
Stellar Blockchain Advantages
US Bancorp chose the Stellar blockchain for its finance-first architecture and additional layers of control that meet the needs of institutional clients. The Stellar blockchain offers built-in tools that allow issuers to freeze and reverse asset transfers, which was one of the main reasons why US Bank chose to build on it. According to Villano, “Out-of-the-box stablecoins enable faster, cheaper payments 24/7,” and the bank had to think about other protections related to knowing your customers, the ability to transact online, and the ability to reclaim transactions.
In terms of stablecoin market capitalization, Stellar currently ranks 19th, with around $212 million worth of stablecoins operating on the network. The payments and remittances-focused blockchain has been active since 2014. While there is currently no publicly available information about when the U.S. bank’s stablecoin initiative might launch or how the broader system might be structured, the bank’s efforts demonstrate a growing interest in stablecoins among traditional financial institutions.
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