USBDC stablecoin pilot tests cross-border payments by U.S. banks

USBDC stablecoin tests connecting North America and Europe

TLDR:

• U.S. Bank has completed cross-border transactions of cross-continental stablecoins through the Stellar blockchain between entities.
• The tests covered casting, payment redemption, freezing and recovery functions, and verified their links to financial, compliance, risk control and operations systems.
• Bank of America is evaluating the use of the token in cross-border treasury operations, liquidity management and collateral flow, and has not yet announced its opening to customers.

Banks test controls before expanding customer payment access

U.S. Bank used its USBDC stablecoins to complete a true cross-border payment between entities in North America and Europe. The pilot runs on the Stellar blockchain and aims to test the controlled circulation of tokens within the banking system. Bank of America is examining potential applications of the token in treasury operations, liquidity management and collateral flow.

U.S. Bancorp, the parent company of the lender, said the transaction connects blockchain settlement with internal financial, risk, compliance and operations systems. As of now, the bank has not announced customer availability, commercial terms or a timetable for broader promotion. "This real-time pilot demonstrates the potential for us to accelerate global cash management and money transfer capabilities," Kedia noted.

The payment occurred between internal entities at Bank of America rather than external customers. The statement did not identify specific customer participants or retail products. Bank of America is exploring the application of USBDC, a dollar-backed token, to scenarios such as cross-border treasury operations, liquidity management and collateral flow. This pilot does not involve transfers between U.S. banks and external institutions.

Last year, Bank of America partnered with Stellar to test stablecoin issuance on the Stellar network. Today, it has transferred real value to a real-time pilot for moving dollars across borders on the Stellar network. This marks a typical example of institutional adoption.

The transaction uses the Stellar blockchain, a public network used for asset issuance and payment. Bank of America said its systems remain connected to financial, compliance, risk control and operational processes. This integration is at the heart of the test because token transfers require bank controls. The USBDC stablecoin test not only evaluates on-chain settlement, but also simultaneously evaluates these control mechanisms. These systems handle operational inspections related to payments by regulated banks.

Banking groups testing digital currencies seek availability beyond traditional payment times. As long as the underlying network is running, on-chain transactions can be carried out at any time. However, the announcement did not disclose the transfer amount, settlement time, fees or transaction volume, nor did it determine the customer segments for future services, nor did it set public settlement standards for USBDC transactions.

Bank of America announced an experiment in November 2025 to conduct customized stablecoin issuance on Stellar. This phase involves the Stellar Development Foundation and PricewaterhouseCoopers (PwC). Stellar pointed out that for regulated financial services, the network level has the ability to freeze and unfreeze. The real-time payment completed this time is based on earlier work, with previous experiments focusing on the issuance of customized stablecoins.

The USBDC stablecoin pilot evaluation covers multiple key functions

The USBDC stablecoin pilot evaluation includes functions such as casting, payment redemption, freezing and recovery. Coining means creating tokens in the system, while redemption is converted back to their original form through the issuer. Freezing prevents transfers involving assets, while recovery provides issuers with a controlled recovery mechanism. These functions give banks control that is different from open, irreversible cryptocurrency transfers.

Bank of America also used this pilot to verify its digital asset platform. This internal platform supports the issuance, management and circulation of tokenized assets. According to the company, the platform connects the blockchain network with traditional banking infrastructure. Bank of America is considering using the USBDC stablecoin for cross-border treasury operations, liquidity management and collateral flow.

Treasury operations cover bank transfers between different regional units; liquidity management tracks available cash in each account; and collateral flows involve assets that secure financial obligations. Bank of America did not say whether these uses were online or in development, nor did it share specific dates of customer visits.

As the regulatory framework develops, other lenders are also promoting stablecoin projects. The group of 21 institutions includes Bank of America, Citigroup, Goldman Sachs and UBS. They announced plans to pay for a stablecoin joint venture, which is expected to launch U.S. dollar tokens in the first half of 2027. European lenders have also formed the Qivalis Alliance to issue euro-backed tokens.

This pilot is not a retail product. Banks have not announced token supplies, reserve disclosures or customer qualification criteria. The bank also did not state whether the token would be provided beyond the scope of the institution's operations. Its release list lists cross-border payments, treasury work, liquidity management and collateral flows as areas under review.