Obtains the second SPDI bank charter in history! Avanti will launch cryptocurrency asset custody and the USD stablecoin Avit.

After the well-established cryptocurrency exchange Kraken obtained a Special Purpose Depository Institution (SPDI) banking license in mid-September in Wyoming, United States, digital asset bank Avanti Bank & Trust also announced its follow-up to become the second financial institution approved for an SPDI banking license application.

Two and a Half Years in the Making

Based in Wyoming, Avanti operates under the name Avanti Financial Group, Inc., with Avanti Bank & Trust set to launch its cryptocurrency banking services. Once licensed, it will be able to custody cryptocurrencies like Bitcoin, issue tokenized U.S. dollars, facilitate USD deposits, and handle transactions between fiat and crypto assets, similar to the range of services offered by Coinbase.

Its CEO, Caitlin Long, is a seasoned professional with 20 years of experience on Wall Street, former head of pension advisory at Morgan Stanley, and the blockchain chair of Wyoming. The Wyoming Banking Board has approved Avanti to issue the U.S. dollar stablecoin Avit, claiming to address legal, accounting, and tax issues related to stablecoins.

According to their announcement, Avanti plans to first issue the U.S. dollar stablecoin Avit on Blockstream's Bitcoin sidechain Liquid Network and Ethereum, with plans to issue on other blockchains based on customer demand.

Compliance in the Crypto Industry

Avanti aims to bridge the gap between the U.S. dollar financial system and crypto asset custody, meeting the strictest institutional regulatory standards. Their application has now been approved. Previously, in mid-September, when Kraken's Kraken Financial obtained an SPDI license, it also garnered attention.

SPDI banks are non-traditional banks that adhere to the same regulatory standards as traditional commercial banks. While traditional banks focus more on custody of fiat currency, securities, or commodities, and provide trading in securities and commodity markets for clients, the term "Special Purpose Depository Institution (SPDI)" suggests that SPDI focuses more on digital assets such as Bitcoin and Ethereum.

As early as February this year, Avanti CEO Caitlin Long publicly shared the overall plan on Twitter, stating that the compliance license application process would be lengthy, and highlighting the high registration standards for SPDI, where fiat must be 100% reserved, customer deposits cannot be used for lending, and must be immediately repaid upon customer redemption.

This is a significant milestone for the Bitcoin space. Compared to cryptocurrency exchanges that the general public may be less familiar with, the introduction of "crypto banks" that offer services akin to traditional banks could potentially enhance the adoption of crypto assets. Avanti Bank is expected to commence operations in 2021.