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Avanti Launching US’ First Regulated Crypto Bank

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Avanti Financial Group Inc. is a Wyoming corporation formed to apply for a bank charter under Wyoming’s special-purpose depository institution (SPDI) law. Based in Cheyenne, WY, it has applied to do business under the name “Avanti Bank & Trust.” Avanti plans to serve as a compliant bridge to the US dollar payments system and a custodian of digital assets that can meet the strictest level of institutional custody standards.

Serving the Digital Asset Industry

Avanti announced that it will be launching a new US bank to serve the digital asset industry by offering solutions that can only be provided in the US by a regulated bank. The company, formed on Jan 6, is founded by blockchain legislative champion and Wall Street veteran Caitlin Long.

According to Long’s announcement, the future bank is called Avanti, which means “forward” in Italian, and will be focused solely on providing regulated services for digital assets. It has raised $1 million in seed funding.

Avanti planned to hold more assets under administration than deposits, and profits will be generated by providing services to institutional clients, similar to large traditional custody banks such as State Street, Bank of New York Mellon and Northern Trust.

Under Wyoming state law, SPDI banks must keep all of customers’ fiat deposits as liquid assets. These entities, however, get to operate under the regulatory oversight of the crypto-friendly Wyoming Division of Banking instead of the U.S. Federal Deposit Insurance Corporation (FDIC).

Avanti is partnering with bitcoin and blockchain technology startup Blockstream, which will provide bitcoin applications, as well as the software and hardware needed to custody digital assets.

“With Blockstream’s Liquid – a “sidechain” or parallel network sometimes used to move money between exchanges – the company will able to develop a “one-stop shop” for digital asset custody; Avanti can build adjacent blockchain application programming interfaces (APIs) and conventional banking APIs”
– Adam Back, Blockstream CEO.

High Capital Game

Due to the high capital level required to start an SPDI, the Wyoming Division of Banking has only received two applications, which the regulator is working with applicants to refine. It is now developing the policies and procedures for SPDI banks and defining how the regulator will perform its yearly examination and supervision processes.

The Wyoming legislature has several blockchain initiatives coming up later in 2020. They includes bills that would expand the blockchain task force into a select committee, provision for First Amendment protections to code, and extension of the SPDI charter’s field of service to include retail customers.

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