Custodia and Vantage Introduce Avit, the First Bank-Based Stablecoin on Ethereum

• Avit integrates blockchain into the US banking system.
• Regulatory-compliant dollar tokenization.
• Avit lays foundation for future digital payments.

Custodia Bank and Vantage Bank, two US financial institutions, have joined forces to throw A groundbreaking stablecoin called Avit, marking a historic moment in the intersection of blockchain technology and traditional banking. The stablecoin, operating on the Ethereum network with the ERC-20 standard, was introduced through a series of test transactions with an enterprise customer, highlighting its potential to transform digital payments.

This development is notable as it marks the first time that dollar deposits from regulated banks have been tokenized on a public blockchain. The eight test transactions covered the minting, transfer, and redemption of Avit, demonstrating a fully regulatory-compliant procedure for operating stablecoins in an open blockchain environment.

The process involved transfers and redemptions of Avit between companies, using US dollars as the basis. This project not only testifies to the viability of tokenizing deposits in a regulatory-compliant manner, but also suggests an evolution in the way cross-border payments can be handled.

The banks ensured that all transactions strictly complied with the Bank Secrecy Act (BSA), anti-money laundering (AML) and Office of Foreign Assets Control (OFAC) regulations. Compliance was ensured by developing appropriate documentation and policies, which could serve as a model for other financial institutions.

The pilot also marked the first application of Custodia’s U.S. patent for tokenizing bank deposits on public blockchains. The banks hope the test will serve as a foundation for a future real-time programmable payments infrastructure anchored in strict U.S. banking regulations.

As political debates continue in the US over the role of stablecoins in the economy, Avit’s launch suggests a direction for dollar digitization that combines innovation with strict regulation.