A group of U.S. banks plans to offer its own stablecoin, called USDF, in a move to tackle concerns about the reserves behind non-bank issued equivalents.
Firstly, the constituent institutions backed by the Federal Deposit Insurance Corporation (FDIC), one of the industry’s key regulators, said the coin will “address the consumer protection and regulatory concerns of non-bank issued stablecoins.” Secondly, Founding members of the USDF Consortium include New York Community Bank, FirstBank and Sterling National Bank. The consortium wants more financial institutions to join. And while stablecoins play a role in the broader crypto ecosystem by offering traders and investors secure entry and exit points because they are pegged to assets such as fiat currencies, there is concern about the opaque nature of some of the reserves that back up non-bank stablecoins such as Tether’s USDT.
USDF will operate on the Provenance blockchain and will be redeemable 1:1 for cash from any of the group’s members. The consortium sees stablecoin being used for applications such as capital call financing and supply chain finance.
And furthermore, news of the consortium’s plans emerged in November last year when Figure Technologies met with U.S. regulators to discuss issuing such a stablecoin.