U.S. Bank's new blockchain pilot uses a proprietary token with a kill switch, challenging the decentralized nature of existing stablecoins like USDC and signaling a go-it-alone strategy for institutional money movement.
U.S. Bank used Stellar for a blockchain dollar transfer with a kill switch, but XLM price barely moved as traders showed little interest.
The article warns that Circle should worry as U.S. Bank's move could draw enterprise users away from USDC with its own licensed dollar token.
U.S. Bank has successfully tested a blockchain-based dollar transfer system on the Stellar network, utilizing a proprietary token with a built-in 'undo' function. While the bank frames the pilot as a breakthrough in global cash management, the move highlights a departure from decentralized crypto principles and signals a potential shift in how commercial banks approach enterprise-grade stablecoins.
Unlike decentralized stablecoins, the U.S. Bank token includes a 'kill switch' that allows the bank to freeze accounts or destroy tokens in third-party wallets, effectively functioning as a controlled, permissioned wire transfer.
Traders showed little interest in the pilot because the USBDC token is not a public-facing asset, meaning it does not drive retail demand or liquidity for the underlying Stellar (XLM) network.