US Bank testing custom stablecoin issuance on the Stellar network

US Bank has announced that it is testing the issuance of custom stablecoins on the Stellar network in collaboration with PwC and the Stellar Development Foundation (SDF).

Announced during the bank’s Money 20/20 podcast episode, “The Tokenised Future of Banking,” the project highlights the intersection of compliance, technological innovation, and financial infrastructure.

Why US Bank chose Stellar

US Bank’s decision to explore stablecoin issuance on Stellar stems from the blockchain’s combination of speed, reliability, and built-in safeguards.

Mike Villano, Senior Vice President and Head of Digital Asset Products at US Bank, emphasised that traditional banking protections, including know-your-customer (KYC) measures and the ability to reverse or claw back transactions, are essential when integrating tokenised assets.

Villano noted that the Stellar network allows banks to freeze assets and unwind transactions directly at its base operating layer, a feature that adds a layer of security and control necessary for institutional adoption.

Stellar, designed from the outset for moving money and issuing assets, offers settlement times of three to five seconds and transaction costs that are a fraction of a US cent.

With over a decade of operational history and 99.99% uptime, the network provides regulated institutions the stability and speed required for mission-critical financial systems.

José Fernández da Ponte, President and Chief Growth Officer at SDF, remarked that earning the trust of US Bank and PwC underscores Stellar’s reliability for large-scale financial operations.

Institutional-grade programmable money

The US Bank trial is emblematic of a larger trend among traditional financial institutions: the adoption of programmable money that incorporates compliance and consumer protections from the start.

Unlike purely speculative digital assets, stablecoins designed for banking use require rigorous frameworks to safeguard customer funds while enabling efficiency and innovation.

Villano explained that implementing these protections ensures that bank clients can interact with digital assets without compromising security or regulatory compliance.

This move also signals a broader shift in the financial landscape, where blockchain technology is no longer an experimental frontier but a viable infrastructure for regulated financial services.

Stablecoins on the rise

The development comes amid global discussions about the rapid growth of stablecoins and their implications for financial stability.

The European Central Bank recently highlighted the expansion of stablecoins as a rising factor with potential spillover risks, particularly as the combined market capitalisation of stablecoins surpasses $280 billion.

While Tether and USDC dominate the US market, initiatives like US Bank’s pilot illustrate how regulated institutions can innovate responsibly, offering customers programmable digital money with built-in compliance features.

By testing custom stablecoin issuance on Stellar, US Bank, PwC, and SDF are helping to shape the next generation of digital banking infrastructure.

Their collaboration points to a future in which banks can safely integrate blockchain-based assets, unlock faster and cheaper payment methods, and maintain the safeguards necessary for consumer trust.

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