US Bank-Issued Stablecoin Avit Lands On Ethereum

Custodia Bank and Vantage Bank have launched Avit, the first US bank-issued stablecoin on the public Ethereum network. This milestone demonstrates how regulated institutions can tokenize dollar deposits while adhering to federal banking standards, opening the door to modernized, programmable payments in the American financial ecosystem.

A New Era in Banking

The pilot took place on March 25, with Custodia Bank and Vantage Bank minting and transferring Avit tokens in real-world transactions using the Ethereum mainnet. This achievement marks the first time a U.S. bank has successfully tokenized demand deposits on a permissionless blockchain. The stablecoin leverages the well-known ERC-20 token standard, enabling broad compatibility with existing decentralized finance (DeFi) infrastructure.

Milestone Collaboration

Both banks played distinct yet complementary roles. Custodia, based in Wyoming, oversaw issuance, custody, and monitoring of the Avit tokens via its Avit Management System. Meanwhile, Vantage Bank, hailing from Texas, held the underlying fiat reserves and provided settlement services such as Fedwire and ACH. Their partnership resulted in a fully compliant process for integrating bank demand deposits with Ethereum-based digital assets.

Security and Oversight

Ensuring regulatory compliance was central to Avit’s design. From Bank Secrecy Act (BSA) guidelines to anti-money laundering (AML) and Office of Foreign Assets Control (OFAC) rules, both Custodia and Vantage designed robust documentation and policies, setting a new standard for stablecoin governance within the U.S. banking perimeter.

Key Advantages

• Programmable: Avit is integrated into smart contracts on Ethereum, allowing real-time settlement features and advanced automation.
• Fast Settlement: Transactions settle at blockchain speed, significantly reducing waiting times.
• Transparent: Public block explorers show token movements, and banks apply standardized controls to protect user deposits.
• Regulated Environment: Unlike many stablecoins that operate outside the traditional banking sector, Avit is issued and managed within an FDIC-insured framework.

The launch of Avit on Ethereum by Custodia Bank and Vantage Bank hints at a future where traditional finance and public blockchain networks function in tandem. By transferring and redeeming dollar deposits using a permissionless ledger under rigorous oversight, these institutions introduce a workable blueprint for other U.S. banks to tokenize their assets in a legally compliant manner. Avit’s success may encourage broader adoption of US bank-issued stablecoin options that offer speed, transparency, and safety for digital dollar payments.