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Unpacking the "Avit", Avanti Bank's New Digital Asset Being Built With Blockstream - CoinDesk

When Avanti Financial hinted at a new bank-issued digital asset late last month, it was scant on details.

“Avit has no analog,” Avanti CEO Caitlin Long said at the time. “It is a digital asset. Blockstream is our technology partner. We’re not going to announce anything more than that. One could presume that the Bitcoin blockchain will be involved.”

According to Long, the Avit will be commercial bank money or programmable electronic cash, redeemable at par with a U.S. dollar. It’s also not a security token, or a digital representation of an investment that’s expected to generate returns.

The Avit represents one of several bank-led innovations in the digital asset space. With Goldman Sachs considering its own stablecoin issuance, Sygnum issuing a stablecoin tied to the Swiss franc and other experiments, Avanti has joined a growing list of banks that want to compete with startups on digital assets.

However, Long said she believes stablecoins are not the ideal digital asset for trying to bring fiat into the crypto world.

Unlike cash, stablecoins are generally issued as intangible assets, which means they aren’t physical or don’t derive their value from contractual claims like stocks and bonds do. Because of this, they have uncertain legal enforceability. Circle and Coinbase, the creators of the USDC stablecoin, acknowledge USDC transactions may not be legally enforceable in the coin’s terms of service.

When stablecoins aren’t issued as intangible assets, they exist under Article 8 of the Uniform Commercial Code, which requires they have intermediaries. Paxos is only able to issue its paxos standard (PAX) stablecoin without a middleman because Paxos is a registered trust company.

Avit will be issued under a different portion of U.S. federal and state law that Long would not name because Avanti has a patent pending for the Avit’s design.

While stablecoins are considered “property” by the Internal Revenue S...

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