Group of 4 US Banks plan to offer Stablecoins called USDF
To address the concerns about the Stablecoins issued by non-banking organizations, four of United State’s Banks have come together to launch their own Stablecoins, named USDF. The Federal Deposit Insurance Corporation (FDIC), which is one of two US agencies to provide depositors with deposit insurance and is one of the main regulators in the industry, is supporting the plans made by these banking institutions.
Although the banks involved in creating USDF are secured by FDIC, there is no information on whether the USDF reserves are. Although as per reports, FDIC is currently evaluating whether USDF Stablecoin reserves are eligible for its “Pass-through coverage”, which is insurance coverage, covering up to USD 250,000 for token holders.
The purpose of this plan is to ensure that consumer protection and the regulatory framework is maintained by offering an alternative to the Stablecoins that non-banking institutions have created, which are opaque.
The USDF Consortium aims to have many US financial institutions be part of it; currently, it is composed of four major banks of the United States, which are also the founders of this consortium: The Synovus Financial Corporation, New York Community Bancorp, Inc., Sterling National Bank, and FirstBank.
The USDF Stablecoins will be minted solely by United States banks and can be redeemed at 1:1 for cash from any group members. It will function on the public Provenance Blockchain enabling B2B digital cash transactions and being available to various banks and their clients to provide services such as financing for capital and supply chain as-well-as invoice.
In crypto, Stablecoins contribute to the ecosystem by providing a secured system to investors and traders for making transactions. It is tied to assets, generally to Fiat currencies.
The establishment of USDF may set up a path for tonnes of opportunities for DeFi transactions in this world of never-ending creativity and innovation.