US Bancorp is running a stablecoin pilot on the Stellar blockchain, joining the growing variety of banks experimenting with the technology.
To perform the pilot project, the bank is working with the consulting firm PricewaterhouseCoopers (PwC) and the Stellar Development Foundation.
“The bottom line is that institutions have arrived. The recent financial infrastructure is now taking shape and US Bank, PwC and SDF are working to unlock the subsequent wave of digital banking,” the Stellar Development Foundation said on Tuesday.
US Bancorp is the publicly traded parent company of US Bank, which has greater than $664 billion in assets under management and reports annual revenue of greater than $27.5 billion, in response to the bank.
Source: Stellar
Stablecoin test to show the promise of blockchain to banks
Kurt Fields, director and blockchain lead at PwC, said the pilot's essential goal was to show the promise of blockchain in a trusted, bank-grade environment during a Tuesday episode of the US banking podcast “Money 20/20.”
“We've been talking about blockchain for years and now we're at some extent where it's now not about innovation,” he said.
“It's about practical application in a strict, highly regulated environment where we leverage the tools on-chain, on this case on the Stellar network, to point out that the promise of programmable money actually advantages not only the institution, but in addition the shoppers they serve.”
The Stellar blockchain was chosen for its ability to freeze assets
The Stellar network launched in 2014 as an open-source, decentralized blockchain for cross-border payments and asset tokenization.
Mike Villano, head of digital asset products at US Bank, said his organization selected Stellar for its pilot since it enables transaction settlement and recovery.
Villano said the Stellar platform has the “capability at its base operating level to freeze assets and settle transactions,” which is a crucial consideration for customer protection.
“Often you can write that into the business logic itself, but on this case you can do it on the core layer of the blockchain. So that was very interesting for us,” he added.
Research into tokenized assets can also be within the works at US Bank
Villano also said that the US bank is exploring tokenized assets and is within the research phase.
“We're also doing additional research on tokenized assets. If you can leverage the worth proposition of moving quickly, 24/7 and really efficiently, you can apply that to all types of other related asset classes,” he said.
“That’s why we’re excited to see where this research leads for us.”
