Avit, the first permissionless blockchain-based bank-issued stablecoin in the US, has been formally introduced by Custodia Bank and Vantage Bank. Announced on March 25, 2025, this innovative development represents a major milestone in the integration of blockchain technology, specifically on the Ethereum network, with traditional banking.
Avit is a tokenization of Custodia Bank’s dollar-demand deposits and is intended to be based on the US dollar. The launch is to improve the effectiveness of payment systems within the U.S. banking infrastructure while meeting the increasing demand for U.S. dollar stablecoins around the world.The ERC-20 standard, which is extensively used on the Ethereum network, is used by the stablecoin. To verify adherence to U.S. banking regulations, such as the Bank Secrecy Act (BSA), Anti-Money Laundering (AML) statutes, and guidelines established by the Office of Foreign Assets Control (OFAC), Custodia and Vantage Banks carried out a set of eight controlled test transactions. The purpose of these tests was to confirm that all protocols were correctly followed when minting, transferring, and redeeming Avit tokens.
Vantage Bank will maintain the fiat reserves supporting the stablecoin and provide conventional settlement services through Fedwire and ACH, while Custodia Bank will supervise blockchain activities using its in-house Avit Management System. This cooperative endeavour demonstrates how American banks can use blockchain technology to enhance their payment processes while still meeting legal constraints.
“We broke ground on the legal and regulatory front, proving that U.S. banks can collaborate to tokenize demand deposits on a permissionless blockchain in a regulatorily compliant manner,” said Caitlin Long, CEO of Custodia Bank, who was excited about this new step. Long underlined that other financial institutions may follow suit and use this endeavour as a model to incorporate blockchain technology into their operations.
Regarding the possible influence of stablecoins, Jeff Sinnott, CEO of Vantage Bank, added: “This collaboration demonstrates how conventional banking can advance by integrating cutting-edge technology like blockchain. Stablecoins have enormous potential to revolutionise international trade and financial processes.
Avit’s launch coincides with a rise in interest in stablecoins and digital assets among institutional and retail investors. Solutions like Avit give banks the chance to stay competitive while satisfying consumer desires for quicker and more effective payment ways while traditional financial institutions struggle with modernisation issues.
Avit’s ability to provide quick processing times and minimal transaction fees in a regulated setting is one of the major benefits of using it. This makes it a desirable choice for companies trying to optimise their payment procedures while maintaining adherence to current financial laws.
Additionally, compared to conventional banking techniques, Avit offers better openness and auditability by leveraging a permissionless blockchain. Because it fosters trust among users who might be hesitant to embrace new financial technologies, this transparency is essential.
Custodia Bank has created specialised documentation, rules, and procedures that adhere to federal banking regulations as part of its dedication to regulatory compliance. In addition to protecting against possible legal problems, this cautious approach creates a model for other organisations wishing to investigate related projects.
An important turning point in the development of stablecoins within the American banking sector was marked with the launch of Avit. Custodia and Vantage Banks have effectively tokenized dollar-demand deposits on a public blockchain, establishing a standard for how conventional banking might adjust to new technologies.
To sum up, Custodia Bank’s introduction of Avit, the first stablecoin issued by the bank on Ethereum, is a major step forward in integrating blockchain technology with conventional banking. Initiatives like Avit have the potential to significantly impact payment systems and improve financial operations in a number of industries as interest in digital assets continues to rise globally.
Stakeholders will be closely monitoring this new stablecoin’s performance and adoption rates among users looking for effective and legal solutions for their financial transactions as it embarks on its journey within the cryptocurrency environment.
