US banks join forces to launch their own stablecoin

A group of banks backed by the United States Federal Deposit Insurance Corporation (FDIC) reported that they are planning to launch their own stable cryptocurrency or stablecoin.

The association, called USDF Consortium, is made up of several financial entities such as: Synovus Bank, which is ranked 48th on the list of the largest banks by assets in the United States, along with New York Community Bank, FirstBank and Sterling National Bank .

The stablecoin, dubbed USDForward (USDF) , is based on the public Provenance blockchain and adheres to the country's regulatory standards, according to a statement released by the consortium.

“The availability of USDF on a public blockchain means that in addition to peer-to-peer and business-to-business money transfers, banks and their customers will be able to use USDF for a wide range of applications,” the group notes. Some use cases that are mentioned are the payment of invoices and the financing of supply chains.

It should be noted that the banks did not specify whether the USDF reserves will also be backed by the FDIC . They assure that one of the objectives of the group is to increase membership with more banks for this year.

As specified in the letter, the intention is to be an alternative to stable currencies issued by companies. In recent years, stablecoins have emerged as a possibility to safeguard savings, as they are a type of digital asset designed to maintain a stable value in parity with the dollar or another fiat currency, unlike bitcoin and other cryptocurrencies.

And, apparently, the banks want a portion of that market, not insignificant, which reaches USD 171,000 billion . This sector is largely cornered by companies like Tether (USDT) with a capitalization of USD 78 billion, followed by Circle's USDCoin (USDC) with USD 44 billion, according to CoinGecko.

Some in favor and others against stablecoins in the United States
The announcement by the US-based banks suggests that stablecoins are approved by some regulators, even as other government agencies have pointed out that stablecoins may pose certain risks .

In the same vein, the Securities and Exchange Commission (SEC) and the United States Department of the Treasury indicated that the growth of stable currencies has been such that they consider them a systemic risk for the dollar and the US economy.

In contrast, some US agencies, including the FDIC, which supports the USDF Consortium initiative, have said that stablecoins could become a common means of payment in the future , but they need to be regulated to mitigate the risks involved . entail.

According to the FDIC and other agencies, the use of stablecoins for traditional payments could soon increase, both at the individual and institutional level.

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