U.S. Bancorp Pilots Dollar-Backed Stablecoin on Stellar as Major Banks Push Into Tokenized Finance

Banking Giant Explores Blockchain Rails With Compliance-Ready Controls

TL;DR

• U.S. Bancorp, the fifth-largest U.S. bank, is testing a dollar-backed stablecoin on the Stellar blockchain.
• The pilot emphasizes bank-grade controls such as transaction freezing, unwinding, and strict KYC requirements.
• Stellar’s low-cost, high-uptime settlement layer and PwC’s involvement signal a serious institutional push into tokenized money.

U.S. Bancorp has begun testing a dollar-backed stablecoin on the Stellar network, a move disclosed on November 25, 2025, that positions the country’s fifth-largest bank firmly inside the accelerating race toward tokenized banking infrastructure. The pilot is part of a broader initiative inside the institution’s digital-assets and money-movement division, built to explore how regulated banks can issue programmable deposits and move client funds over blockchain rails with the same control, reversibility, and oversight expected from traditional banking systems. The bank, with more than $671 billion in assets, is treating the test as a potential extension of its long-standing payments business rather than a speculative crypto experiment.

Mike Villano, the bank’s senior vice president and head of digital asset products, underscored that the project is driven by compliance and operational safeguards rather than novelty. He explained that any tokenized dollar offered by a regulated institution must support “know-your-customer” requirements, as well as the “ability to unwind transactions” and “claw back transactions,” a standard not typically built into most market-dominant fintech stablecoins. Villano said Stellar was chosen after the bank confirmed the network’s “base operating layer” enables freezing assets and reversing transfers when necessary—controls that align with how banks manage errors, disputes, or fraud in legacy systems. These features allow U.S. Bancorp to experiment with digital-asset issuance without compromising risk frameworks or customer-protection obligations.

Stellar’s infrastructure plays a central role in the effort, offering settlement times of roughly three to five seconds and transaction fees measured in fractions of a U.S. cent. The Stellar Development Foundation, which reports 99.99% uptime across more than a decade of network activity and billions in annual payment volume, described the pilot as a demonstration of how mature public blockchains can handle mission-critical financial operations. José Fernández da Ponte, the foundation’s president and chief growth officer, noted that financial institutions depend on absolute infrastructure reliability, adding that SDF takes the bank’s trust “very, very seriously.” The partnership also includes PwC, reinforcing that the pilot is being developed inside a heavily audited, fully supervised environment rather than the lightweight model favored by early crypto-native issuers.

The bank’s initiative signals a shift in competitive dynamics within the stablecoin market, where fintech issuers have dominated despite carrying none of the institutional protections demanded of federally regulated banks. A bank-issued stablecoin with built-in compliance controls, integrated auditability, and traditional deposit backing introduces a distinct category of tokenized dollars that could appeal to enterprises requiring predictable oversight, reversible settlement, and compatibility with existing treasury workflows. Corporate clients stand to benefit from faster settlement cycles, 24/7 domestic and cross-border transfers, reduced payment friction, and potential integration with tokenized cash-management tools—although the bank has not yet confirmed whether the product will be offered to the public or restricted to internal testing and institutional use cases.

U.S. Bancorp has not provided a launch timeline, and the pilot remains exploratory while regulatory conversations around tokenized bank liabilities continue to evolve. Internal commentary suggests that institutional demand for crypto custody is stronger than appetite for blockchain-based payments at this stage, and the bank acknowledges that monetization and product design will depend on how regulators classify and supervise stablecoin-style assets issued by banks. Even so, the move places U.S. Bancorp alongside financial heavyweights experimenting with blockchain-powered payments, a trend gaining momentum as institutions search for faster, programmable, and interoperable settlement infrastructure.

The project arrives as stablecoins face heightened scrutiny from central banks, with policymakers warning about systemic spillover risks if tokenized money grows without clear regulatory boundaries. U.S. Bancorp’s approach—slow, compliance-first, and built on a public blockchain rather than a proprietary ledger—signals that the next phase of institutional stablecoins will prioritize governance guarantees over speculative adoption. The test represents more than just another stablecoin trial; it marks a structural step toward integrating traditional banking controls into open blockchain ecosystems, shaping the groundwork for how tokenized deposits and regulated digital money could operate at scale.

This article has been refined and enhanced by ChatGPT.