US Bank, the fifth largest commercial bank in the United States, has begun testing issuance of a custom stablecoin on the Stellar network, according to an announcement on Tuesday.
According to a blog post, the bank is collaborating with PwC and Stellar Development Foundation (SDF) on this initiative, which aims to investigate whether traditional banks can securely issue programmable currencies on public blockchains.
In a blog post, Mike Villano, Head of Digital Assets at US Bank, highlighted Stellar’s built-in ability to freeze or unwind transactions as a key feature in line with regulatory and compliance requirements, such as know-your-customer (KYC) and transaction reversibility, as banks adopt blockchain rails for mainstream use.
Stablecoins are cryptocurrencies whose prices are pegged to fiat currencies such as the US dollar, and are gaining attention as a potential tool to enable faster and cheaper payments across borders. Financial institutions and global companies are increasingly looking to incorporate these into their operations and financial management to reduce costs. Keylock predicted that cross-border stablecoin payments could reach $1 trillion annually by the end of this decade.
Read more: Swedish buy now, pay later giant Klarna deploys stablecoin on Stripe bridge
