Custodia and Vantage launch first bank-issued stablecoin

Custodia Bank and Vantage Bank have partnered to create Avit, a US dollar stablecoin tokenising demand deposits on Ethereum (CRYPTO:ETH).

The collaboration, announced March 25, marks what the firms claim is America’s first bank-issued stablecoin on a permissionless blockchain.

Avit operates via ERC-20 tokens, allowing users to issue, transfer, and redeem stablecoins backed by real US dollars held in Custodia’s demand deposits.

“We broke ground on the legal/regulatory front, proving that U.S. banks can collaborate to tokenise demand deposits on a permissionless blockchain in a regulatorily compliant manner,” Custodia CEO Caitlin Long stated, emphasising the model’s regulatory compliance.

The project distinguishes itself from synthetic stablecoins by leveraging Federal Reserve-authorised entities like Custodia to tokenise actual deposits.

Long clarified that Avit represents “real dollars,” contrasting with synthetic alternatives criticised by Federal Reserve Governor Christopher Waller in February.

Ethereum’s role in the initiative drew attention from blockchain advocates.

While Custodia has historically aligned with Bitcoin (CRYPTO:BTC), the choice of Ethereum for Avit highlights its technical capabilities.

Ethereum educator Anthony Sassano noted: “Permissionless blockchain” refers to Ethereum, which secures $125.8 billion in stablecoins—nearly double Tron’s $64.8 billion (DefiLlama data).

Vantage Bank CEO Jeff Sinnott called the launch a “pivotal moment” for payments innovation.

The partnership reflects growing institutional interest in blockchain-based financial tools, though regulatory clarity remains a hurdle.

Custodia’s model could set a precedent for banks exploring digital asset integration while adhering to traditional banking frameworks.

While Avit’s adoption is still nascent, its compliance-driven approach underscores the potential for bank-issued stablecoins to bridge traditional finance and decentralised ecosystems.

Ethereum’s dominance in stablecoin infrastructure—hosting $3.6 billion in tokenised Treasurys (RWA.xyz)—positions it as a key platform for such innovations.