The US fifth-largest commercial bank has started testing the issuance of custom stablecoins on the Stellar blockchain network, marking another significant step in traditional finance's embrace of digital payment infrastructure.
U.S. Bank announced the pilot program in partnership with PwC and the Stellar Development Foundation during the bank's Money 20/20 podcast "The Tokenized Future of Banking." The initiative explores whether traditional banks can safely issue programmable money on public blockchains while meeting regulatory requirements.
Mike Villano, senior vice president and head of digital asset products at U.S. Bank, highlighted Stellar's built-in ability to freeze assets and unwind transactions as a key feature that aligns with regulatory and compliance requirements, including Know-Your-Customer protocols and transaction reversibility.
Wall Street's Accelerating Stablecoin Race
U.S. Bank's move comes as the Minneapolis-based institution has formed a new division focused on cryptocurrency and money movement, with CEO Gunjan Kedia stating during an October earnings call that the bank is working on two stablecoin fronts: holding cryptocurrency for clients and testing actual payments using stablecoins.
The bank joins a growing list of major financial institutions entering the stablecoin space. Citigroup and Coinbase announced a partnership in October to provide expanded digital-asset payment capabilities to the bank's corporate clients, focusing initially on making transfers between crypto and fiat currencies easier across borders.
JPMorgan's blockchain unit expanded its JPM Coin platform to support euro-denominated payments, while Bank of America CEO Brian Moynihan indicated the bank is prepared to launch its own dollar-backed stablecoin as soon as lawmakers enact clear regulations.
Market Growth and Regulatory Momentum
The institutional push into stablecoins comes amid explosive market growth. Stablecoin transaction volume reached $625 billion in February 2025, up 21% from the same month in 2024, with $6.3 trillion in stablecoin payments settled in the 12 months to February 2025 - equivalent to 15% of global retail cross-border payments.
The total value of issued stablecoins has doubled to $250 billion from $120 billion just 18 months ago, and is forecast to reach more than $400 billion by year-end and $2 trillion by 2028, according to industry projections.
A Keyrock-Bitso report forecasts stablecoins could handle $1 trillion in cross-border payments by 2030, up from under 3% of the market in 2024, driven by efficiency gains, lower costs, and financial inclusion for unbanked populations.
Why Stellar Attracts Institutions
U.S. Bank chose Stellar over alternatives because the network allows token issuers to freeze assets, giving traditional institutions more control than most blockchains can offer. As of September, Stellar had 9.8 million unique wallets and processed $32 billion in payments over the previous year, according to the Stellar Development Foundation's quarterly update.
The network has gained traction with major financial players. Franklin Templeton pioneered tokenized treasuries on Stellar, enabling 24/7 trading of U.S. government securities with under six-second settlements and near-zero transaction costs. The Franklin OnChain U.S. Government Money Fund has attracted over $580 million of assets since its 2021 debut.
José Fernández da Ponte, president and chief growth officer of the Stellar Development Foundation, emphasized the network's 99.99% uptime over a decade and its ability to settle transactions in three to five seconds at a fraction of a U.S. cent.
Regulatory Framework Enables Adoption
The recently passed GENIUS Act in the United States provides a clear regulatory framework for the world's largest stablecoin market, allowing banks and payment institutions to enter the sector with greater confidence. The legislation, taking effect in early 2027, has triggered a global race among regulators to develop similar frameworks.
Europe's MiCA framework is now live across the European Union, marking a milestone for digital asset oversight and providing uniform standards that banks and fintechs can rely on.
As traditional financial institutions increasingly view stablecoins as essential infrastructure rather than speculative assets, the technology appears poised to reshape global payment systems - with speed, cost efficiency, and 24/7 availability as key competitive advantages over legacy banking networks.