Historic First: US Banks Launch Real-Dollar Stablecoin on Ethereum
In a landmark development for the US banking and blockchain sectors, Custodia Bank and Vantage Bank have announced the successful launch of what they claim is the first U.S. bank-issued stablecoin deployed on a permissionless blockchain.
On March 25, Custodia revealed that it had tokenized U.S. dollar demand deposits to facilitate the issuance, transfer, and redemption of its new stablecoin, “Avit,” utilizing the ERC-20 standard on the Ethereum blockchain.
“This represents the activation of a new U.S. dollar payment rail within the American banking system,” Custodia stated. The firm emphasized the legal and regulatory precedent the launch sets, demonstrating that U.S. banks can compliantly issue tokenized demand deposits on public blockchains.
Custodia CEO Caitlin Long noted, “We’ve broken new ground in proving that regulated banks can collaborate to bring tokenized demand deposits to life on a permissionless blockchain.”
Echoing this sentiment, Vantage Bank President and CEO Jeff Sinnott called the launch a “pivotal moment in reshaping the financial landscape,” underscoring the transformative potential of blockchain technology and stablecoins in modernizing payments.
In a series of posts on X (formerly Twitter), Long stressed that Avit is a “real dollar” stablecoin, not a synthetic one. This contrasts with the Federal Reserve’s characterization of stablecoins as “synthetic” dollars — a term used by Fed Governor Christopher Waller in a February 12 speech.
Long clarified that true U.S. dollars can only be issued by the Federal Reserve or legally authorized institutions like Custodia. Avit qualifies, she explained, because it tokenizes bank demand deposits — customer funds that are available for withdrawal at any time, such as in checking accounts.
The choice of Ethereum as the underlying blockchain drew praise from the Ethereum community. While Custodia has traditionally supported Bitcoin, Ethereum advocates were quick to highlight that the bank opted for Ethereum’s robust and decentralized infrastructure.
“ETH fixed this. Bitcoin couldn’t,” noted Ethereum supporter Evan Van Ness. Educator Anthony Sassano also pointed out that the “permissionless blockchain” referenced by Custodia is, indeed, Ethereum.
Currently, Ethereum hosts over $125.8 billion in stablecoins — nearly double the amount on the second-largest stablecoin network, Tron, according to DefiLlama. Additionally, Ethereum has tokenized more than $3.6 billion in U.S. Treasury bills, far outpacing Stellar’s $465.7 million, as reported by RWA.xyz.
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