Custodia and Vantage launch inaugural stablecoin from bank on Ethereum platform

ethereum

Custodia Bank, in collaboration with Vantage Bank, recently made history by tokenizing a bank’s U.S. dollar deposits on a permissionless blockchain. The groundbreaking release of Avit tokens on the Ethereum mainnet, using the ERC-20 standard, established a new precedent in the cryptocurrency world for creating fungible assets on the Ethereum blockchain.

Vantage Bank played a pivotal role in managing fiat reserves and traditional banking services, while Custodia Bank handled blockchain operations including issuance, custody, and reconciliation through its Avid Management System. Together, the banks completed eight rigorously tested transactions involving the minting, transfer, and redemption of Avit tokens, ensuring full compliance with U.S. banking regulations such as BSA, AML, and OFAC.

In a joint statement, Custodia Bank’s CEO Caitlin Long remarked on the groundbreaking legal and regulatory implications of their collaboration. She expressed optimism for the future of stablecoin innovation, anticipating the removal of existing regulatory barriers to facilitate greater consumer access to the benefits of permissionless blockchain technologies. Long commended Vantage Bank’s president and CEO, Jeff Sinnott, for leading the charge in this transformative initiative.

Sinnott hailed the moment as a significant milestone in reshaping the financial landscape, underscoring the role of blockchain and stablecoins in revolutionizing payment systems. By executing the transaction successfully, the banks demonstrated how responsible innovation could empower financial institutions to drive cross-border modernization while upholding regulatory standards. Long pointed out that the issuance of stablecoins by a bank, such as the Avit tokens, now placed stablecoins on par with “real dollars” as recognized by the Federal Reserve.

This achievement also marked a personal victory for Long, who founded Custodia Bank in Wyoming in 2020. Custodia’s journey with federal regulators to secure a master account and navigate the complexities of cryptocurrencies has been met with various challenges. While the Federal Reserve classified Custodia as a depository institution eligible for a master account in 2022, later developments led to rejections from the Federal Reserve Bank of Kansas City in 2023.

The broader regulatory landscape surrounding cryptocurrencies has seen fluctuations, with initiatives like Operation Choke Point 2.0 raising concerns within crypto circles. This coordinated effort by regulators to deter banks from engaging with cryptocurrencies has prompted responses from industry stakeholders, including federal agencies like the FDIC and the Federal Reserve. President Donald Trump’s administration has been viewed favorably by many in the industry, with promises to position the United States as a global leader in cryptocurrencies.

In a series of executive orders and appointments within his administration, President Trump has shown a commitment to advancing crypto-related activities and fostering innovation in the sector. These actions have been met with optimism by industry participants, signaling potential growth opportunities for cryptocurrency adoption in the U.S. With ongoing developments in the regulatory landscape, the collaboration between Custodia Bank and Vantage Bank marks a significant milestone in the evolution of stablecoins and blockchain technology in the financial ecosystem.