on the crypto
When Avanti Financial hinted at a new digital asset issued by the bank late last month, it didn't specify any kind of detail. “Avit has no analogues,” Avanti CEO Caitlin Long said at the time. “It is a digital resource.
Blockstream is our technology partner. We will not announce anything more than this. It could be assumed that the Bitcoin blockchain will be involved ”. Avit represents one of several bank-led innovations in the digital assets space.
Not a stablecoin
Long said he believes stablecoins are not the ideal digital asset to try and bring fiat into the world of cryptocurrencies. Unlike cash, stablecoins are generally issued as intangible assets, which means that they are not physical or do not associate their value with contractual credits as is the case with stocks and bonds.
Because of this, they have an uncertain legal value. Avit will circumvent this problem by continuing to remain true to US federal and state law. Long did not explain the details as the Avanti has a pending patent for Avit's design.
While stablecoins are considered "property" by the Internal Revenue Service, Long said Avit is likely to be treated as money by the IRS and as "cash equivalent" by accountants, making it easier for businesses and individuals to use Avit. with no negative financial consequences.
Bitcoin infrastructure?
According to Blockstream CEO Adam Back, the asset will be issued on Liquid, a network developed and supervised by Blockstream that aims to move bitcoins faster than the blockchain itself to buy Bitcoins. Transaction details will only be seen by Avanti and the Wyoming Division of Banking due to the Bank Secrecy Act, Long said.
"I don't think the Bank Secrecy Act is constitutional," he said. “It has a significant overhang. However, we have made it clear that we will respect the law 100% ”.
Although the first announcement of Avanti's Avit is a plan focused on Bitcoin's sidechain Liquid, the bank also plans to release an Ethereum version of Avit and to support other protocols that demand demand from customers, he said.
“So it's not purely a protocol for risk management purposes,” he said. "We will have multiple protocols on which goods can be issued and the customer can choose."
Stable reserves
Although Avit is not pegged to the US dollar, the currency would be 100% backed by a reserve of traditional US assets. In this way it resembles target2, the real-time gross settlement system operated by the European Central Bank (ECB), said Stefan Loesch, director of the tokenization company eFractio and lecturer at the University of Nicosia in Cyprus.
The ECB's system fully guarantees all the euros it moves so you can settle large transactions instantly instead of at the end of the day. Avanti will probably entrust its Avit guarantee to the deposits of the Federal Reserve and the US Treasury.
