A group of U.S. Banks plans to issue its own Stablecoin

A group of banks, including New York Community Bank, FirstBank, and Sterling National Bank plan to issue its own stablecoin, called USDF.

A Group of US banks to offer stablecoin
A group of US bank | Image: Optimisus

The members of the USDF Consortium purpose is to address the problems regarding the reserves behind nonbank-issued equivalents.

According to the group's announcement on January 12, the digital asset addresses the clients protection and regulatory concerns of nonbank issued stablecoins.

More so, the consortium, which is made up of institutions backed by the Federal Deposit Insurance Corp (FDIC) aims to attract more financial institutions to join.

Last year in November, there was a report mentioning that the FDIC has been considering whether digital asset reserves should be for its pass-through insurance, which would protect clients up to $250,000 if the bank holding the collateral were to fall. However, the group hasn't made any official statement.

According to the group's recent announcement, USDF will be a bank-minted alternative to stablecoins like Circle's USD coin (USDC) and Tether's USDT and it will operate on the Provenance blockchain technology. In addition, the group notes the digital asset will be redeemable 1:1 for cash from any of the group's associates.

All in all, the consortium also sees the stablecoin being used for apps like supply chain finance and capital call financing.