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.
Comprising institutions backed by the Federal Deposit Insurance Corporation (FDIC), one of the industry’s key regulators, the group said the coin will “addresses the consumer protection and regulatory concerns of non-bank issued stablecoins,” according to an announcement Wednesday.Founding members of the USDF Consortium include New York Community Bank, FirstBank and Sterling National Bank. The consortium wants more financial institutions to join.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.Earlier this month CoinDesk joined a court case seeking access to documents received by the New York Attorney General’s office (NYAG) from Tether.USDF will be a bank-minted alternative to USDT and Circle’s USD Coin, which account for the lion’s share of the $170 billion stablecoin market. USDT has a market cap of $79 billion and a 24-hour trading volume of $56.5 billion, according to CoinGecko. USDC has a market cap of $44.5 billion with a trading volume of just under $3 billion.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 the stablecoin being used for applications such as capital call financing and supply chain finance.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.