Stellar Network enables Bank of America's first cross-border transfer to USBDC

Traditional banks build their own payment channels instead of relying on public stablecoins

This pilot marks a broader strategic move by traditional lenders: to establish exclusive payment channels rather than relying on public stablecoins. U.S. Bank used its independently developed and issued stablecoin USBDC to complete a real-time cross-border payment transaction. According to Forkast, Stellar and multiple other media reports, the transaction was run on the Stellar network. Bank executives described the move as part of a modern global cash flow management strategy.

This pilot has attracted much attention because it uses bank-issued tokens rather than the widely used public stablecoins. To date, most cross-border crypto payment activities have relied mainly on tokens issued by independent companies, such as USDT or USDC. In contrast, Bank of America builds and controls its own stablecoins, thereby directly overseeing the issuance, custody and settlement processes.

Select Stellar as the settlement tier

Stellar was selected as the settlement tier for this pilot. Over the years, the network has positioned itself as an infrastructure suitable for payments and asset tokenization, actively attracting banks and fintech companies seeking alternatives to traditional correspondent banking channels. Real-time transactions by a major U.S. bank provide specific empirical data for this.

Bank executives view the pilot as evidence that the traditional financial community is no longer just watching the stablecoin market. Banks are exploring whether they can issue and control their own tokens for internal treasury management and customer settlement needs, rather than handling dollar movements through existing public stablecoin issuers.

Opportunities presented by the regulatory environment

This pilot coincides with increasing regulatory clarity on stablecoins in the United States, which encourages banks to experiment more openly. Legislative and regulatory developments over the past two years have provided clearer guidelines for banks to issue dollar-backed tokens, reducing the legal uncertainty that previously had caused large institutions to move forward cautiously.

Although Bank of America has not disclosed the full picture or timetable for expanding the scope of USBDC, the completed transactions demonstrate technical feasibility. It shows that regulated banks can use public blockchain networks for cross-border issuance, transfer and settlement between their own stablecoins.

Market Impact

For Stellar, hosting real-time transactions from major U.S. banks provides a visible institutional use case that could strengthen its positioning with competing settlement networks in terms of bank partnerships. In addition, it adds to the growing number of examples of public blockchains being used for regulated, bank-controlled payment processes rather than just purely retail crypto activities.

In a broader sense, the pilot suggests that banks may be increasingly inclined to issue their own stablecoins rather than relying on third-party issuers such as Tether or Circle for institutional clearing. If other banks follow up with similar pilot projects of their own stablecoin, it may reshape part of the stablecoin market, shifting some cross-border transaction volume from public stablecoin to bank-issued alternatives based on the blockchain track.

The USBDC pilot marks an early but concrete step for banks to control their own stablecoin infrastructure rather than outsourcing, a shift that could affect how cross-border payments evolve in the coming years.

FAQs

What is USBDC?

USBDC is a stablecoin issued directly by Bank of America and used in this pilot to conduct cross-border fund transfers on the Stellar network.

Why does Bank of America use Stellar instead of other blockchains?

Bank of America reportedly chose Stellar as the settlement layer for this pilot, but the bank has not disclosed its exclusive commitment to the network.

How is this different from using stablecoins such as USDT or USDC?

USBDC is issued and controlled directly by Bank of America, unlike USDT or USDC, which is issued by independent companies rather than banks.

Does this mean that other banks will launch their own stablecoins?

The pilot did not confirm plans from other banks, but it reflected a general industry trend for financial institutions to explore their own stablecoin infrastructure.