Custodia and Vantage Bank Partner for First Bank-Issued Stablecoin
In a landmark development for the United States banking sector, Custodia Bank and Vantage Bank have announced the issuance of ‘Avit’, the country’s first public bank-issued stablecoin on a permissionless blockchain. This initiative signifies a major step towards integrating blockchain technology within traditional financial institutions, offering a compliant and regulated digital asset solution.
Background on Custodia and Vantage Banks
Custodia Bank, based in Wyoming, was founded to bridge digital assets and the U.S. dollar payments system while maintaining rigorous institutional custody standards. The bank has been at the forefront of advocating for regulatory clarity in digital banking.
Vantage Bank, a community bank headquartered in Texas, provides various financial services and has demonstrated an openness to adopting innovative banking solutions. Its collaboration with Custodia Bank marks a significant embrace of blockchain technology within the traditional banking landscape.
The Avit Stablecoin Initiative
On 25 March 2025, Custodia Bank and Vantage Bank successfully tokenised U.S. dollar demand deposits, resulting in the issuance of the Avit stablecoin. This process involved eight regulated test transactions, encompassing the minting, transfer, and redemption of Avit tokens on the Ethereum blockchain using the ERC-20 standard.
Vantage Bank managed the fiat reserves and facilitated traditional banking services, including Fedwire and ACH transactions. Meanwhile, Custodia Bank provided blockchain issuance, custody services, transaction monitoring, and reconciliation through its Avit Management System. This partnership demonstrates how banks can leverage blockchain technology to modernise financial transactions while remaining within regulatory frameworks.
Statements from Leadership
Caitlin Long, Founder and CEO of Custodia Bank, highlighted the regulatory breakthrough achieved through this initiative. She stated:
“We broke ground on the legal/regulatory front, proving that U.S. banks can collaborate to tokenize demand deposits on a permissionless blockchain in a regulatorily-compliant manner.”
Jeff Sinnott, President and CEO of Vantage Bank, echoed this sentiment, emphasising the transformative potential of blockchain within banking:
“This event marks a pivotal moment in reshaping the financial landscape, demonstrating how blockchain and stablecoins can revolutionise payments.”
Their statements reflect a shared vision of harnessing blockchain technology to enhance efficiency, security, and transparency in banking transactions.
Implications for the Financial Sector
The introduction of Avit represents a significant advancement in modernising payment systems. By leveraging blockchain technology, the stablecoin offers several potential benefits, including reduced transaction costs, expedited settlements, enhanced programmability, and improved auditability within a regulated environment.
This initiative highlights the increasing convergence of traditional banking and digital assets, setting a precedent for further collaborations between established financial institutions and fintech innovators. If successful, it could pave the way for broader adoption of blockchain-based financial solutions across the industry.
Conclusion
The partnership between Custodia Bank and Vantage Bank in launching Avit signals a progressive shift in the banking industry towards digital asset integration. By successfully tokenising demand deposits on a permissionless blockchain while ensuring full regulatory compliance, the initiative showcases how blockchain technology can be effectively incorporated into traditional financial systems.
