A consortium of US financial institutions has set out to develop a bank-issued stablecoin – USDF – to “unlock the financial opportunities” of blockchain technology.

Figure CEO Mike Cagney says, “USDF opens up endless possibilities.

The USDF consortium was founded New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank and Synovus Bank, alongside fintechs Figure Technologies and JAM FINTOP.

Figure CEO Mike Cagney says, “The USDF opens up endless possibilities for the expanding world of DeFi transactions.

“The ease and immediacy of using the USDF for on-chain transactions was demonstrated this fall when NYCB hit the USDF used to settle securities transactions executed on Figure’s alternative trading systems.”

Financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) intend to create a network of banks to “eliminate friction” in the financial system and accelerate the adoption of blockchain and digital transactions.

USDF, a bank-issued alternative to non-bank-issued stablecoins, will be issued exclusively by US banks and will be redeemable on a 1:1 basis against cash from a consortium member bank.

The group says a growing number of customers are demanding access to blockchain transactions and the benefits and security it can provide.

It is hoped that the USDF will maintain consumer protections and address regulatory concerns of stablecoins issued by non-banks, providing a more secure option for transacting on the blockchain.

“Our membership in the Consortium will enable us to integrate real-time payments into our operating model, enabling us to leverage the benefits of blockchain technology to streamline multi-party decision-making processes and provide certainty of settlement,” says the Chief Financial Officer of Sterling National Bank. , Bea Ordonez.

USDF operates on the public Provenance Blockchain, which means USDF can be used for peer-to-peer (P2P) and business-to-business (B2B) money transfers, call funding capital and invoice and supply chain financing.

NBH Bank’s Chief Digital Officer says the USDF Consortium will enable banks of all sizes, including community banks, to deliver digital banking solutions that more and more customers have come to expect.

The Consortium says it intends to increase its membership of FDIC-insured banks this year.