American banks choose Stellar Network! PwC endorsement, stablecoin pilot launched

American banks are testing customized stablecoin issuance on the Stellar Network blockchain, marking a forward-looking step by major financial institutions in the programmable digital currency space. This pilot program is supported jointly by PwC and the Stellar Development Foundation (SDF), with Stellar maintaining an uptime of 99.99%, settlement speeds of 3-5 seconds, and transaction costs of only a few tenths of a cent.

Why Did Bank of America Choose Stellar Network Over Ethereum

In the Money 20/20 podcast, Mike Villano, Senior Vice President and Head of Digital Asset Products at Bank of America, emphasized that security and control are non-negotiable when bringing tokenized assets into the banking environment. “For banking customers, we must consider protective measures such as Know Your Customer, transaction reversals, and transaction recovery,” Villano said.

Villano added: “As we conduct more research and development on the Stellar Network platform, we have found that one of its significant advantages is that its underlying operational layer has the ability to freeze assets and reverse transactions.” This capability is crucial for traditional banking operations, as banks need to be able to respond to situations such as fraud, money laundering, or erroneous transactions. In contrast, transactions on traditional blockchains like Bitcoin and Ethereum are irreversible once confirmed, which presents a fundamental conflict with the compliance requirements of the banking industry.

The design of the Stellar Network is tailored specifically for financial institutions. The platform allows asset issuers to set account-level controls, including freezing specific accounts, reversing transactions, or requiring transactions to be approved. This “programmable compliance” enables the Stellar Network to meet the regulatory requirements of the banking industry while retaining the transparency and efficiency advantages of blockchain. In contrast, while Ethereum is more well-known, its underlying layer does not support these features and requires complex smart contracts to achieve them, increasing technical risks and costs.

From a technical performance perspective, Stellar Network indicates that its architecture is designed for the large-scale issuance of assets and transfer of funds. For over a decade, its uptime has consistently maintained at 99.99%, with settlement speeds as fast as 3-5 seconds and transaction fees as low as a fraction of a cent. This combination of performance is extremely rare in the blockchain space: Bitcoin's confirmation time is about 10 minutes, Ethereum's is about 15 seconds but with high and volatile Gas Fees, whereas Stellar Network achieves bank-level standards in speed, cost, and reliability.

The Three Major Banking-Level Advantages of the Stellar Network

Compliance and Controllability: The underlying layer supports essential banking functions such as freezing assets and reversing transactions.

Extreme Performance: 3-5 seconds settlement, 99.99% uptime, as low as 0.00001 dollars transaction fee

Institutional-grade reliability: Operating for over ten years without major failures, suitable for mission-critical systems.

PwC and SDF provide strategic support

This pilot project has received joint support from PwC and the Stellar Development Foundation (SDF), and this public-private partnership model provides multiple guarantees for the success of the project. PwC, as one of the Big Four accounting firms, has deep expertise in financial regulatory compliance, risk management, and auditing. Its involvement means that the stablecoin pilot by American banks will be conducted under a strict compliance framework, ensuring that it meets the requirements of U.S. regulatory authorities.

José Fernández da Ponte, President and Chief Growth Officer of the Stellar Development Foundation, pointed out that institutional-grade reliability is the foundation of the Stellar Network's appeal. “When you are developing mission-critical systems, providing financial services, and transferring consumer funds, you must ensure that your blockchain operates correctly,” he said. “We are honored to earn the trust of our partners at Bank of America and PwC. We value this trust immensely.”

This statement shows that SDF fully understands the extremely high reliability requirements of the banking industry. Unlike public chains that serve retail users, providing infrastructure for banks means that any technical failure could result in enormous financial losses and reputational risks. The Stellar Network's record of 99.99% uptime over more than a decade proves that it has withstood the test of time.

From a strategic perspective, the decision of the American bank to collaborate with PwC and SDF, rather than independently developing or choosing other public chains, demonstrates its emphasis on quickly entering the market. Developing a blockchain solution in-house could take years, while the mature infrastructure of the Stellar Network and the technical support from SDF allow the American bank to complete a pilot and evaluate feasibility within months.

Customized stablecoin banking application scenarios

The pilot program of American banks focuses on “customized stablecoins,” which fundamentally differ from the commonly seen universal stablecoins like USDT and USDC in the market. Customized stablecoins are digital currencies specifically designed for certain financial institutions or application scenarios, featuring high programmability and control capabilities. Banks can embed various rules at the time of issuance, such as allowing only KYC-verified accounts to hold them, limiting the scope of trading counterparts, and setting upper limits on transaction amounts.

This customization capability is crucial for banking operations. Traditional stablecoins like USDT circulate in the open market once issued, and the issuer cannot control who holds them or how they are used. Customized stablecoins, on the other hand, allow banks to maintain the same level of control as traditional operations while enjoying the efficiency improvements brought by blockchain. For example, banks can issue stablecoins exclusively for corporate clients for cross-border payments or provide digital dollars for wealth management clients for rapid settlement.

From the perspective of application scenarios, customized stablecoins may first be implemented in the cross-border payment field. Traditional cross-border remittances typically take 3-5 working days, go through multiple intermediary banks, and incur fees as high as 5%-10%. Using stablecoins on the Stellar Network, cross-border transfers can be completed in 3-5 seconds, with fees that are almost negligible. This efficiency improvement is highly attractive to enterprise customers with substantial international business.

Secondly, securities settlement is another potential application. The settlement cycle for traditional stock trading is T+2 (two business days after the transaction), while using Blockchain technology can achieve real-time settlement. This not only reduces settlement risk but also decreases capital occupation and enhances capital efficiency. If American banks successfully implement securities tokenization and real-time settlement on the Stellar Network, it will significantly enhance their competitiveness.

Third, internal fund management is also an important application. Large banks have branches around the world, and internal fund allocation often involves complex processes and high costs. By using stablecoins on the Stellar Network, banks can achieve real-time allocation and transparent tracking of internal funds, significantly improving fund management efficiency.

Stablecoin market value breaks through 280 billion USD as regulatory pressure rises

As U.S. banks pilot customized stablecoins, the global stablecoin market is experiencing rapid expansion. On Monday, the European Central Bank (ECB) warned that although the influence of stablecoins in the Eurozone remains limited, their rapid expansion poses emerging risks to financial stability, especially in the context of increasingly close ties with global markets.

These findings come from the European Central Bank's report “The Rise of Stablecoins: Still Small in Size in the Euro Area, but Overflows Risks are Imminent,” which examines the structural vulnerabilities, use cases, and cross-border risks associated with the rapidly developing stablecoin ecosystem. According to the report, the total market capitalization of all stablecoins has soared to over $280 billion, reaching an all-time high and accounting for approximately 8% of the total crypto asset market. Among them, two USD-pegged stablecoins dominate: Tether (USDT) has a market capitalization of $184 billion, while USDC has a market capitalization of $75 billion.

The warning from the European Central Bank underscores regulators' concerns about the systemic risks of stablecoins. Although stablecoins claim to be pegged to fiat currencies, there may be issues with the transparency of their reserve assets, the reliability of their redemption mechanisms, and the financial soundness of the issuers. If a large stablecoin experiences a run or decouples, it could trigger a chain reaction in the crypto market and even affect the traditional financial system.

Against the backdrop of increasing regulatory pressure, it is particularly significant that American banks have chosen to test customized stablecoins on the Stellar Network. Unlike stablecoins in the market that lack regulation, the stablecoins issued by banks will be subject to multiple regulatory oversight from the CFTC, OCC (Office of the Comptroller of the Currency), and others, ensuring strict supervision over the transparency of reserve assets and the reliability of the redemption mechanism. This “compliant stablecoin” model may become mainstream in the future, replacing the currently ambiguous stablecoin products.

Current Status of the Global Stablecoin Market

Market Cap: Surpassed $280 billion, setting a new historical high.

Market Concentration: USDT ($184 billion) and USDC ($75 billion) dominate.

Market Share of Cryptocurrency: Approximately 8%, indicating the core position of stablecoins in the ecosystem.

Regulatory Trends: Regulatory agencies in Europe and the United States are strengthening the stablecoin regulatory framework.

The Future Landscape of Bank-Level Stablecoins

The successful pilot of the U.S. bank on the Stellar Network may usher in a new era of “bank-grade stablecoins.” Unlike the stablecoins currently issued by crypto companies, bank-issued stablecoins will have higher trust, stronger regulatory compliance, and deeper integration into the financial system. These stablecoins can be directly linked to bank accounts, enjoy deposit insurance protection, and seamlessly connect to existing payment and settlement networks.

This initiative indicates that major financial institutions are increasingly turning to programmable money—digital assets that possess the security and compliance features required by traditional banking. This shift is not only a technological upgrade but also an innovation in business models. Programmable money allows banks to embed smart contracts within digital assets, enabling automated payments, settlements, and compliance checks, significantly reducing operational costs and human errors.