Major Banks Explore Reserve-Backed Digital Currency on Public Blockchains
A group of major global banks, including Santander, BOA, and UBS, are exploring the creation of a 1:1 reserve-backed digital currency on public blockchains. This move is the latest effort by traditional financial institutions to harness blockchain technology for enhanced payments.
The consortium, which also includes Barclays, BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, MUFG Bank Ltd, and TD Bank Group, is assessing the feasibility of a new industry-wide offering. PNC Bank has been chosen as the custodian for reserves backing crypto-native lender Anchorage Digital Bank's payment-optimized stablecoins, which are a type of cryptocurrency designed for everyday transactions.
The initiative is driven by recent stablecoin-focused legislation like the GENIUS Act and aims to enhance competition while ensuring full compliance with regulations and risk management. The banks are in contact with relevant market regulators and supervisors regarding this project.
The consortium's exploration of a 1:1 reserve-backed digital currency on public blockchains signals a significant step towards mainstream adoption of blockchain technology in the financial sector. The involvement of major global banks indicates a growing interest in and acceptance of cryptocurrencies and stablecoins.
