Digital Bank SoFi enters Stablecoin race with US dollar token
Digital bank operator SoFi Technologies has launched its own US dollar stablecoin, joining a growing list of financial firms betting on what is seen as a critical component of the digital asset economy. The company's chartered bank has started issuing SoFiUSD, fully backed one-to-one with cash reserves, and is using it for internal settlements, SoFi announced Thursday. It will be made available to SoFi members "in the coming months," the company said.
The San Francisco-based fintech company is positioning the token as a tool for 24/7 settlement across card networks, retailers and businesses, calling it a "key element" for cross-border payments. With a regulatory green light in the US following the passage of the Genius Act this year, financial firms are piling into the technology, seeing stablecoins as a cheaper, faster way of moving money.
“Blockchain is a technology super cycle that will fundamentally change finance,” SoFi CEO Anthony Noto said in a statement.
Unlike some banking giants that have been trialing stablecoins on more specialized blockchains, SoFi has launched its token on Ethereum, a blockchain with public governance, according to a company spokesperson. It plans to expand SoFiUSD to other blockchains over time, the person added.
Stablecoins are cryptocurrencies designed to maintain a consistent value, typically with backing by US dollar-denominated assets such as Treasuries. Tether Holdings SA’s USDT and Circle Internet Group Inc.’s USDC are the most commonly used stablecoins, but financial institutions have become increasingly interested in issuing their own, opening up the possibility of generating revenue on reserves.
SoFi has not said it that it would hold short-term investments as reserves, as allowed under the Genius Act. However, it said it can generate yields on its cash reserves to be shared with stablecoin holders. It also mentioned plans to to have its infrastructure used by other businesses looking to issue their own stablecoin products.
There are currently hundreds of stablecoins in circulation with a total market value of nearly $310 billion, according to data tracker DeFiLlama. Stablecoins could be used for more than $50 trillion in annual payment flows by 2030, Bloomberg Intelligence analyst Diksha Gera estimates.
SoFi said the stablecoin launch builds on its momentum in digital assets this year after it reintroduced crypto spot trading on its platform in June. Its shares closed down nearly 5% at $25.27 on Wednesday.
The San Francisco-based fintech company is positioning the token as a tool for 24/7 settlement across card networks, retailers and businesses, calling it a "key element" for cross-border payments. With a regulatory green light in the US following the passage of the Genius Act this year, financial firms are piling into the technology, seeing stablecoins as a cheaper, faster way of moving money.
“Blockchain is a technology super cycle that will fundamentally change finance,” SoFi CEO Anthony Noto said in a statement.
Unlike some banking giants that have been trialing stablecoins on more specialized blockchains, SoFi has launched its token on Ethereum, a blockchain with public governance, according to a company spokesperson. It plans to expand SoFiUSD to other blockchains over time, the person added.
Stablecoins are cryptocurrencies designed to maintain a consistent value, typically with backing by US dollar-denominated assets such as Treasuries. Tether Holdings SA’s USDT and Circle Internet Group Inc.’s USDC are the most commonly used stablecoins, but financial institutions have become increasingly interested in issuing their own, opening up the possibility of generating revenue on reserves.
SoFi has not said it that it would hold short-term investments as reserves, as allowed under the Genius Act. However, it said it can generate yields on its cash reserves to be shared with stablecoin holders. It also mentioned plans to to have its infrastructure used by other businesses looking to issue their own stablecoin products.
There are currently hundreds of stablecoins in circulation with a total market value of nearly $310 billion, according to data tracker DeFiLlama. Stablecoins could be used for more than $50 trillion in annual payment flows by 2030, Bloomberg Intelligence analyst Diksha Gera estimates.
SoFi said the stablecoin launch builds on its momentum in digital assets this year after it reintroduced crypto spot trading on its platform in June. Its shares closed down nearly 5% at $25.27 on Wednesday.
Next Story