Stellar News Today: Connecting Traditional Banking with Blockchain: U.S. Bank Pilots Stablecoin for Around-the-Clock Transactions

U.S. Bancorp is piloting a stablecoin tied to the U.S. dollar on the

blockchain, representing a notable move by a traditional bank into the digital asset sector. Based in Minneapolis, U.S. intends to utilize Stellar’s technology to deliver round-the-clock, faster, and more cost-effective payments, while also addressing regulatory and operational requirements unique to banking customers. This initiative reflects a wider industry shift as established financial institutions look to benefit from the increasing popularity of stablecoins, which are generally linked to the U.S. dollar and supported by cash or short-term government securities .

Mike Villano, who leads digital asset products at U.S. Bank as senior vice president, pointed to Stellar’s distinctive capabilities as a major advantage. "

enable payments that are quicker, less expensive, and available at any time, but for our banking clients, we needed to consider additional safeguards such as know-your-customer protocols, online transaction capabilities, and the option to reverse transactions," he explained. Villano highlighted that Stellar’s features, like freezing assets and reversing transactions, make it especially suitable for institutional applications.

Stellar was created as a public blockchain tailored for financial services and has seen increasing adoption by institutions. The platform, which facilitates tokenized assets and international payments, processed $32 billion in transactions last year and now has

. The Stellar Development Foundation, an independent nonprofit, promotes the blockchain as an open and neutral alternative to platforms run by corporations. and chief growth officer, remarked that more institutions are turning to on-chain solutions, a trend fueled by regulatory changes and evolving client expectations.

The project from U.S. Bank is part of a larger movement among established banks to incorporate stablecoins into their services. In October, the bank revealed the formation of a digital assets and money

division, with CEO Gunjan Kedia stating that safeguarding crypto assets and facilitating stablecoin transactions are . Still, Kedia admitted that demand from clients for stablecoin payments is "more muted" than for custody solutions .

This development also highlights the growing competition in the stablecoin market. Citigroup Inc. has recently teamed up with

to work on stablecoin projects, while Ripple and other blockchain companies are expanding their offerings for financial institutions . U.S. Bank’s pilot follows similar initiatives by Western Union, which in the coming year.

Experts interpret this trend as a reaction to the increasing costs of cross-border payments and the demand for instant settlement. Stablecoins are seen as a way to reduce dependence on conventional banking systems, though regulatory oversight remains a challenge. U.S. Bank’s focus on compliance and flexible transactions could serve as a model for other banks exploring the digital asset space

.

As the banking industry continues to evolve alongside the rise of cryptocurrencies, U.S. Bancorp’s experiment with a Stellar-based stablecoin underscores the increasing convergence of traditional finance and blockchain. The results may shape how banks balance innovation and risk management in the future.

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