SoFi Technologies has launched SoFiUSD, a fully reserved US dollar stablecoin issued by its banking subsidiary, SoFi Bank.

According to Thursday’s announcement, SoFiUSD is backed one-to-one by cash held by SoFi Bank, a nationally chartered and insured depository institution, and is redeemable on demand. It is designed to support low-cost settlement for banks, fintechs and enterprise platforms.

A SoFi spokesperson told Cointelegraph that SoFiUSD will initially be issued on the Ethereum network, with plans to add support to other blockchains over time.

The company said SoFiUSD can be used across a range of payment and settlement functions, including card networks, retailers, remittances through SoFi Pay and transactions on its Galileo platform, with potential use as a dollar-denominated asset in markets with volatile currencies. The stablecoin is currently live for internal settlement only.

SoFi Technologies (SOFI) is a US financial services company that offers consumer banking, lending, investing and crypto services, while its Galileo platform provides payments and financial infrastructure to fintechs and financial institutions.

The company’s share price rose by about 5% in early trading on Thursday, and has increased by over 70% in the last six months, according to Yahoo Finance data.

The news comes after SoFi launched crypto trading for its customers in November, beginning a phased rollout that includes assets such as Bitcoin (BTC) and Ether (ETH).  

Related: US Fed pulls guidance blocking its banks from engaging with crypto

Major US banks explore stablecoins

With the passage of the GENIUS Act in July, which clarifies the regulatory framework for stablecoins in the United States, several US banks have begun exploring the use of dollar-backed digital tokens.

In July, JPMorgan Chase CEO Jamie Dimon said the bank plans to participate in stablecoins and deposit-based digital tokens, citing competition from fintech firms during an earnings call. The comments came the same day Citigroup CEO Jane Fraser said the bank is considering issuing a stablecoin to support digital payments.

That same month, Bank of America CEO Brian Moynihan said the bank was in the early stages of exploring stablecoins, with an initial focus on their use as payment and settlement tools. Moynihan added that the bank has been preparing for potential adoption and would move forward as customer demand and supportive legislation allow.

In October, Wells Fargo Investment Institute issued a report highlighting stablecoins’ potential to enable faster settlement, reduce currency risk and costs, and support self-custody and programmable payments, while noting their possible role in expanding access to financial services.

While major banks are exploring stablecoins, some banks have opposed the use of yield-bearing stablecoins, arguing that such products could draw deposits away from the traditional banking system.

In August, several US banking groups led by the Bank Policy Institute urged Congress to tighten provisions in the GENIUS Act, warning that gaps in the law could allow stablecoin issuers or affiliates to indirectly offer yield.

The GENIUS Act bars stablecoin issuers from paying interest directly, but does not explicitly apply the restriction to exchanges or affiliated entities, a loophole that crypto exchanges have used to offer yield to clients.

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Source: https://cointelegraph.com/news/sofi-us-dollar-stablecoin-bank-fintechs?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound

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