MINNEAPOLIS — U.S. Bank has launched its own U.S. dollar-backed stablecoin and completed a live cross-border transaction on a public blockchain, a move the bank said could eventually support faster global payments, liquidity management and other treasury functions.
The bank said its proprietary stablecoin, called USBDC, was used to make a payment between U.S. Bank entities in North America and Europe using the Stellar blockchain.
U.S. Bank described USBDC as one of the first bank-issued stablecoins deployed on a public blockchain and said the technology could provide 24/7 transaction capabilities while remaining connected to the bank’s existing finance, risk, compliance and operations infrastructure.
“This live pilot demonstrates our ability to accelerate global cash management and money movement capabilities,” U.S. Bank Chairman and CEO Gunjan Kedia said in announcing the transaction.
“We are excited to create value for our clients and harness the power of a new technology within the banking system,” Kedia added.
Bank Tests Controls Over Stablecoin
Beyond demonstrating a cross-border payment, U.S. Bank said the pilot tested several of the controls financial institutions would need to manage a stablecoin.
Those included the ability to mint the stablecoin, redeem payments, freeze assets and claw back transactions.
The test also validated U.S. Bank’s internally developed Digital Asset Platform, which the bank said provides the underlying infrastructure for issuing, managing and transferring tokenized assets while connecting traditional banking systems with blockchain networks.
Unlike traditional payment networks that can be constrained by operating hours and intermediaries, blockchain-based stablecoins have attracted interest from financial institutions in part because of their potential to move value around the clock and settle transactions more quickly.
U.S. Bank said the Stellar network offers near-instant settlement and transaction costs of less than 1 cent.
More Uses Being Explored
The bank said it is exploring additional applications for its digital asset platform, including liquidity management, moving collateral, cross-border treasury operations and other institutional uses where blockchain technology could potentially increase efficiency, transparency or settlement speed.
The initiative expands an existing relationship between U.S. Bank and the Stellar Development Foundation.
“This pilot is another step forward in our broader digital asset strategy,” said Jamie Walker, head of digital assets and money movement at U.S. Bank. “Our focus remains on delivering solutions that solve real client challenges while maintaining the safety, security and reliability that clients expect from U.S. Bank.”
Timing Not Revealed
U.S. Bank did not indicate in its announcement when USBDC could become broadly available to customers or whether the stablecoin will move beyond the pilot stage.
U.S. Bancorp, the Minneapolis-based parent of U.S. Bank National Association, serves approximately 15 million customers globally and employs nearly 70,000 people.
