Group of U.S. banks forms consortium to issue a stablecoin

A group of insured FDIC financial institutions, the USDF Consortium, announced plans to create a network of banks to promote the stablecoin USDF issued by its members.

We launched the bank-led @USDFConsortium today that is establishing a network of banks to further the adoption and interoperability of the bank-minted USDF™ stablecoin on @provenancefdn. https://t.co/D6kP9w7REJ

— USDF Consortium (@USDFConsortium) January 12, 2022

The consortium aims to enable regulatory-compliant value transfer on the blockchain. USDF addresses consumer protection and the regulation of non-bank “stablecoins”, according to the press release.

The group includes New York Community Bank, NBH Bank, FirstBank, Sterling National Bank, Synovus Bank, as well as JAM Fintop and Provenance Blockchain Foundation with support from Figure Technologies. The creation of the consortium was in response to demand from bank clients for blockchain-based real-time payments solutions.

The alliance plans to significantly expand the number of participants among FDIC-insured banks.

USDF will be pegged to the U.S. dollar at 1:1. The stablecoin can be exchanged at any consortium bank for fiat.

The initiative will run on the Provenance public blockchain. In addition to peer-to-peer and interbank payments, clients will be able to use USDF in scenarios such as fundraising and supply-chain financing.

“We intend to create a comprehensive digital financial ecosystem to broaden access to solutions for managing custodial and treasury operations, loans and integrated financial information, while lowering transaction costs for small and medium-sized businesses,” said Valeri Kramer, Chief Digital Officer of NBH Bank.

Earlier in November, the President’s Working Group on Financial Markets published a report, which outlined stablecoin risks and recommended treating asset issuers as banks.

In December, the Office of the Comptroller of the Currency (OCC), within the U.S. Treasury, promised in 2022 to unveil additional recommendations on integrating cryptocurrencies into banks’ product lines.

Earlier, an interagency sprint involving the Fed, FDIC and OCC was launched. The outcome of these efforts will be the delineation of responsibilities between regulators with regard to oversight of digital assets.

In June, NYDIG entered into an agreement with tech giant NCR to open access to cryptocurrencies for 650 banks in the United States.

In December, the National Credit Union Administration allowed its members to partner with third-party organizations to add the ability to buy, sell and store cryptocurrencies.

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