U.S. Bank Tests Stablecoin on Stellar Blockchain

U.S. Bank’s announcement positions it among a growing cohort of traditional financial institutions testing stablecoin technology. The bank joins Citi, Goldman Sachs, Barclays, and Bank of America, all of which have recently expressed interest in stablecoin ventures. This collective movement signals a fundamental shift in how major banks view blockchain technology—not as a threat, but as a complementary payment infrastructure. Mike Villano, senior VP and head of digital asset products at U.S. Bank, emphasized this perspective on the Future of Finance podcast, stating, “It’s another way to move money on a blockchain, and we look at blockchain as an alternative payment rail.”

The timing of these developments coincides with increased regulatory clarity, particularly following the signing of the GENIUS Act, which establishes frameworks for stablecoin issuance and trading. This legislative progress has catalyzed institutional participation, with banks now actively exploring how digital assets can enhance their service offerings. U.S. Bank’s stock performance following the announcement—shares rose 2.8% to $49.08—reflects market optimism about traditional financial institutions successfully integrating blockchain technology into their operations.

U.S. Bank’s selection of the Stellar blockchain was deliberate, driven by specific technical features that address regulatory and security concerns. The layer-1 network’s architecture allows for freezing assets and unwinding transactions at the blockchain level, providing crucial control mechanisms for financial institutions operating in regulated environments. Villano highlighted this advantage, noting, “One of the great things about the Stellar platform, as we did some more research and development on it, was learning that they have the ability at their base operating layer to freeze assets and unwind transactions.”

This capability distinguishes Stellar from many other blockchain networks and aligns with the compliance requirements of traditional banking. Kurt Fields, a Blockchain leader at PwC, described the project’s objective as demonstrating “the promise of blockchain in a trusted, bank-grade environment.” The Stellar network, which has been operational since 2014 with a focus on payments and remittances, currently hosts approximately $212 million in stablecoins. Circle’s USDC dominates this activity, representing $200 million or 94% of the stablecoins on the network, though recent data from DefiLlama shows the network experienced stablecoin outflows exceeding 20% in the past week.

U.S. Bank’s stablecoin pilot represents an expansion rather than an initial foray into digital assets. In October, the firm announced it would custody the reserves for crypto bank Anchorage Digital’s stablecoins, establishing its credibility in the digital asset custody space. This existing expertise provides a foundation for the current Stellar-based initiative, allowing the bank to leverage internal knowledge while exploring new applications of blockchain technology.

The collaboration with established partners further strengthens the project’s prospects. The Stellar Development Foundation brings deep blockchain expertise, while PwC contributes consulting rigor and regulatory insight. Villano expressed curiosity about the practical applications that will emerge from the pilot, stating, “We’re very interested to see what use cases are going to manifest from that and what customers are going to be most interested in.” This customer-focused approach suggests U.S. Bank views stablecoins not as a technological experiment but as a potential solution to real-world payment challenges.

The collective movement of major banks into stablecoins indicates a broader institutional acceptance of blockchain technology for financial applications. Where cryptocurrencies once represented a disruptive force to traditional finance, stablecoins are increasingly viewed as bridges between conventional banking and digital asset innovation. The participation of consulting firm PwC in U.S. Bank’s project underscores the professional services industry’s recognition of blockchain’s growing importance in financial services.

As traditional financial institutions continue to explore blockchain solutions, the technology’s evolution toward regulatory compliance and institutional-grade security becomes increasingly important. Stellar’s transaction control features represent one approach to meeting these requirements, while the dominance of regulated stablecoins like USDC on the network demonstrates the market’s preference for assets with clear regulatory standing. U.S. Bank’s pilot, alongside similar initiatives from other major banks, suggests that blockchain-based payment rails may soon become standard offerings within traditional financial services, fundamentally changing how money moves between institutions and their customers.