In a bid to promote the adoption of stablecoins, an association of U.S. FDIC-insured financial institutions has come together to build a network of banks that will offer the USDF stablecoin.
USDF Backed by U.S. FDIC-Insured Financial Institutions
The association, named the USDF Consortium after the targeted stablecoin USDF, aims to facilitate the compliant transfer of value on the blockchain. The banks are looking to remove any friction in value transfer using the USDF blockchain and open users to the benefits of blockchain and digital transactions.
The founding banks of the USDF Consortium are the New York Community Bank, Synovus, NBH Bank, FirstBank, and Sterling National Bank. All these banks are backed by the Federal Deposit Insurance Corporation (FDIC). The FDIC is one of the financial industry’s key regulators, a fact that will increase investor confidence where it previously lacked in equivalents with nonbank-issued reserves.
Although the founding banks are FDIC-insured, they did not clarify in the announcement whether the stablecoin will also be insured by the regulator. FDIC has been investigating whether to insure stablecoin reserves. FDIC has pass-through insurance that covers token holders up to $250,000 in case of the bank holding the collateral fails.
USDF to Run on Figure-Built Provenance Blockchain
Nonetheless, the USDF Consortium members said they would mint the stablecoin, and users can redeem them for cash in any of their outlets. The USDF stablecoin will operate on the Figure-built Provenance Blockchain.
Commenting on the launch, Figure Technologies CEO Mike Cagney said that the USDF coin would open up endless possibilities for expanding the world of DeFi transactions. Cagney added that NYCB minted USDF to settle securities trades executed on Figure’s alternative trading systems last fall. The process proved that using USDF for on-chain transactions was easier and faster.
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