The USDF Consortium is an association of financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) that was launched on January 12.
Founding members of the consortium include New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank and Synovus Bank, according to the announcement. A few fintech companies are also part of the group as they will facilitate the promotion and adoption of the new stablecoin, he added.
Bank minted stablecoins
USDF is a bank-issued stablecoin that aims to compete with or dominate existing private sector-issued stablecoins such as Tether (USDT) and Circle’s USDC.
The new stablecoin will be minted exclusively by US banks and will be redeemable on a 1:1 basis against cash from member banks, he added. The aim is to offer what the consortium called “more consumer protection” compared to unregulated stablecoins.
The USDF will operate on the public Provenance Blockchain, an enterprise proof-of-stake network launched in May 2021 by the Provenance Foundation, a company based in San Francisco, California.
Figure Technologies CEO Mike Cagney mentioned potential use cases for decentralized finance, commenting, “USDF opens up endless possibilities for the expanding world of DeFi transactions.”
Andrew Kaplan, Chief Digital and Banking as a Service Officer of NYCB, added:
“As a form of digital currency created and administered by regulated U.S. banks within the USDF Consortium, USDF will enable widespread use of an on-chain real-time payment system that satisfies important principles of security and soundness. , compliance with anti-money laundering standards. , and financial stability.
The announcement did not indicate how many stablecoins would be minted in the initial batch or when they would be made available to users who will need to comply with KYC/AML procedures before they can open a wallet.
Late last year, a number of anti-crypto senators criticized stablecoins saying they posed a risk to the US economy.
According to CoinGecko, there are currently $170 billion worth of stablecoins in circulation with a 24-hour trading volume of around $60 billion. This represents approximately 7.8% of the total crypto market capitalization at present.
Tether is still the dominant stablecoin with 78.5 billion USDT in circulation, according to the company’s transparency report. This gives Tether an overall market share of 46%, a figure that is gradually declining despite regular new token minting. The supply of fasteners has increased by 223% since the same period last year.
The second largest stablecoin with a circulating supply of 44.1 billion is USDC, which has a market share of 26%. Binance’s BUSD is in third place with 14.1 billion tokens or 8.3% of the stablecoin market. Terra USD (UST) overthrew DAI for fourth place with a current supply of 10.5 billion, according to CoinGecko.
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