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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 the 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 blockchain Provenance and adheres to the regulatory standards of the country, according to a statement published 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 if 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 protect 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.

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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.

Banks in the United States want to participate in a multibillion-dollar market led by the company’s stablecoin Tether (USDT). Source: Stock Adobe.

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 signaled that stablecoins stablecoins can present certain risks.

One such claim was made by Boston Fed President Eric Rosengren in June of last year. Rosengren included Tether and other stablecoins on a list of “financial stability challenges,” as reported by CriptoNoticias.

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 should be regulated to mitigate the risks involving.

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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HELEN HERNANDEZ

Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Helen@oicanadian.com Phone : +1 281-333-2229

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