Wyoming-based crypto bank Custodia has partnered with Vantage Bank to test a new tokenization program. They claim this is the first time a U.S. bank has issued a stablecoin on a public blockchain.
The program works by converting customer U.S. dollar deposits into digital tokens called Avit stablecoins, which are issued, transferred, and redeemed on Ethereum using the ERC-20 standard. Unlike stablecoins like USDT and USDC, which are backed by cash equivalents, Avit is fully backed by actual dollar reserves held by the banks.
The test involved eight steps, including minting Avit tokens, allowing customers to self-custody them, using them for business transactions, and redeeming them for cash. Custodia managed the blockchain side of things, while Vantage handled traditional banking services like fiat reserves and payment processing. All transactions followed strict compliance rules.
Custodia CEO Caitlin Long said this test proves that U.S. banks can legally tokenize deposits on public blockchains, and she hopes for fewer regulatory obstacles in the future.
Custodia, a Wyoming-chartered bank, specializes in digital assets and keeps 100% reserves for deposits, unlike traditional banks. It has been in a legal battle with the Federal Reserve after being denied direct access to the Fed’s payment system due to its crypto focus.
Bitcoin will gonna reach $200k soon
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