American Banks Formed Consortium To Mint USDF Stablecoins

A number of American banks formed a consortium to mint USDF stablecoins in an effort to address consumer protection and regulatory concerns about the non-bank-issued stablecoins as we can see more today in our cryptocurrency news.

The USDF Consortium is an association of the Federal Deposit Insurance Corporation that was launched on January 12^th. The founding members of the consortium include New York Community Bank, Sterling National Bank, Firstbank, NBH Bank, and Synovus Bank. A couple of fintech companies aside from the American banks are also part of the group and they will facilitate the promotion of the new stablecoin. The USDF is a bank-minted stablecoin that aims to compete with existing privately issued stablecoins such as USDT and USDC.

The new stablecoin will be minted by US Banks exclusively and it will be redeemable on a 1:1 basis for the cash of members of the banks. The goal is to offer what the consortium referred to as more consumer protection over unregulated stable coins. The USDF will operate on the Provenance Blockchain as an enterprise proof of stake network launched in May 2021 by the Provenance Foundation which is a company based in San Francisco. Figure Technologies CEO Mike Cagney mentioned the potential use cases for decentralized finance noting that USDF opens up a lot of possibilities for the expanding world of DEFI transactions. The NYCB Chief Digital and Banking Service Officer Andrew Kaplan added:

“As a form of digital currency created and administered by regulated U.S. banks within the USDF Consortium, USDF will enable wide use of an on-chain, real-time payments system that satisfies important principles of safety and soundness, compliance with anti-money laundering standards, and financial stability.”

The announcement didn’t state how many stable coins will be minted in the initial batch or when they will become available to the users who will need to comply with the KYC/AML procedures before they are able to open a wallet. Last year we saw a number of anti-crypto senators slam the stablecoins claiming they pose a risk to the US economy.
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There’s also $170 billion in stablecoins in circulation with a 24-hour trading volume of $60 billion. This represents about 7.8% of the total crypto market cap at the moment. Tether is still the most dominant stablecoin with 78.5 billion USDT in circulation as per the company’s reports. This gives Tether a market share of 46% which is a figure that has been dwindling despite the regular mints of the tokens. Tether’s supply increased by 223% since the same time a year ago.

The second biggest stablecoin with a 44.1 billion supply is USDC which has a market share of 26%. Binance’s BUSD is third with 14.1 billion tokens of the stablecoin markets. TerraUSD flipped DAI for fourth place with a  supply of 10.5 billion.