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US banks form stablecoin consortium

US banks form stablecoin consortium

Five US banks have come together to launch a bank-minted alternative to non-bank-issued stablecoins.

The USDF Consortium, organised by JAM Fintop and the Provenance Blockchain Foundation with support from Figure Technologies, comprises founding bank members New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank, and Synovus Bank.

Under the plans, USDF will be minted exclusively by US banks and will be redeemable on a 1:1 basis for cash from a consortium member bank. Available on the public Provenance blockchain, USDF will facilitate peer-to-peer and business-to-business money transfers. Banks and their customers will also be able to use USDF for a wide range of applications, including capital call financing as well as invoice and supply chain finance.

"USDF opens up endless possibilities for the expanding world of DeFi transactions," says Figure CEO Mike Cagney. "The ease and immediacy of using USDF for on-chain transactions was demonstrated this fall when NYCB minted USDF used to settle securities trades executed on Figure's alternative trading systems. We are tremendously excited that NYCB expects to be minting USDF on demand and on a regular basis in the coming weeks."

The founding bank members and Figure have a representative on the board of directors of the Consortium, which will manage the governance, activities, and membership of the business.

Valerie Kramer, NBH Bank's chief digital officer says the Consortium expects to significantly grow its membership of FDIC-insured banks through 2022 and beyond.

"The USDF Consortium will allow banks of all sizes, and importantly, community banks, to provide the digital banking solutions that more and more of our clients expect," she says. "This aligns with our focus on building out a comprehensive digital financial ecosystem to provide greater access to credit, FDIC-insured depository and treasury management solutions, and integrated financial information, all while lowering transaction costs for small and medium-sized businesses."

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