Bank of America tests its own stablecoins for cross-border Stellar payments

Bank of America completes USBDC cross-border payment pilot based on Stellar blockchain

This week, U.S. Bank announced that it has successfully completed a real-time cross-border payment on the Stellar blockchain using its own stablecoin USBDC. The pilot transferred funds between Bank of America entities in North America and Europe, and the USBDC was issued and circulated on the Stellar public network.

In addition to the transfer itself, Bank of America said the experiment also tested core stablecoin functions-including management controls such as casting, redemption, and freezing and recovery-and connected these processes to the bank's existing risk management, compliance and operations systems. The goal is to verify whether stablecoin-based infrastructure can support regulated banking workflows for cross-border treasury management and settlement activities.

Key Points

• Bank of America used its own stablecoin USBDC issued and transferred on Stellar to perform real-time cross-border payments.
• The pilot covers operational functions: casting, redemption, freezing and recovery, and integrates with the bank's risk and compliance infrastructure.
• The bank positioned this test as a proof of concept for a "digital asset platform" designed to bridge tokenized assets and traditional banking systems.
• Bank of America is moving towards more use cases, including cross-border treasury operations, liquidity management and on-chain collateral movement.

Real-time testing of cross-regional stablecoin infrastructure

According to Bank of America, the transaction involves transferring value between banking entities located in North America and Europe. The pilot did not rely entirely on traditional payment systems, but instead used the USBDC on the public Stellar network to transfer funds.

The significance here is not only the ability of stablecoins to transfer value-which has been demonstrated in many contexts-but also whether large banks can achieve this flow of value in a controlled environment. Bank of America said it verified the end-to-end life-cycle functions of stablecoins, including minting and redemption, and exercised administrative mechanisms related to compliance and risk needs, such as freezing and recovery.

From an operational perspective, these controls are often at the core of financial institutions 'management of tokenized assets. By combining testing with risk, compliance and internal operating systems, Bank of America has positioned the pilot as a near-production-level business process rather than a purely technical experiment.

Digital asset platform becomes a bridge to the banking system

Bank of America will connect this pilot with its internally developed "digital asset platform." The bank said the platform aims to connect tokenized assets with its traditional banking infrastructure, allowing stablecoin activities to be integrated into established procedures rather than running as an isolated blockchain application.

This integration is critical because banks often face constraints that consumer-oriented crypto services are not subject to: audit requirements, operational controls, and governance processes to connect to legacy systems. Bank of America's announcement also pointed out that the platform is the basis for future expansion, including cross-border treasury operations, liquidity management and on-chain collateral movement.

From organizational focus to ongoing Stellar testing

This announcement follows the pace of Bank of America's broader digital asset institution. According to the bank's previous disclosure, in October 2025, the bank established a special "digital assets and capital flow department" to focus on stablecoin issuance, crypto asset custody, asset tokenization and digital capital flow.

In addition, Bank of America has been testing customized stablecoin offerings on Stellar since November 2025. The bank said it worked with PricewaterhouseCoopers (PwC) and the Stellar Development Foundation during this testing phase to show that current real-time payments are part of a long-term effort rather than a one-time experiment.

Continuity is an important signal for investors and market observers. Testing the customized release and then moving into real-time cross-border transactions shows that the project is moving from the design and experimental phases to the operational verification phase.

Broader banking drivers in the stablecoin space

Bank of America's move comes amid broader industry trends. Despite concerns raised by certain parts of the U.S. banking industry and the crypto ecosystem-particularly around stablecoin issuers and crypto platforms that provide benefits or rewards-large financial institutions are still pursuing their own stablecoin strategies.

In early September this year, it was reported that 21 major financial institutions, including Bank of America, Citigroup, Goldman Sachs, Deutsche Bank and UBS, were working hard to form a company aimed at issuing stablecoins. The initiative aims to launch dollar-denominated stablecoins in the first half of 2027, with plans to expand to other G7 currencies later. The expected focus includes wholesale, institutional and retail use cases such as cross-border payments and digital asset settlements.

At the same time, other mainstream financial companies have launched token products targeted at specific market segments. For example, Fidelity entered the stablecoin market through Fidelity digital assets in February and launched the Fidelity Digital Dollar (FIDD), which is open to retail and institutional investors. Data cited at the time showed that, according to DefiLlama, FIDD's circulation supply was approximately US$50 million.

Taken together, these developments suggest that banks are not only pursuing settlement efficiency, but also using stablecoin infrastructure as a regulated extension of existing liquidity capabilities. Bank of America's emphasis on compliance-driven functions-casting/redemption and freezing/recovery-is consistent with elements that many institutions may consider essential before expanding U.S. dollar representation on any chain.

Future concerns for USBDC and institutional stablecoins

According to the announcement, Bank of America's next step will focus on other applications such as cross-border treasury, liquidity management and on-chain collateral movement. The key question for the market is how quickly banks can transform pilot control and integration into repeatable scale and broader operational coverage as institutional stablecoin work within the industry shifts from planning to deployment.