VersaBank (“VersaBank” or the “Bank”) (TSX: VB) (NASDAQ: VBNK), a leader in digital banking and cyber security solutions, today announced meaningful expansion to the scope and functionality of the closed ecosystem testing of its revolutionary Digital Deposit Receipts (“DDRs”). As an investment-grade issuer-backed digital asset, represented by actual US or Canadian-dollar deposits with VersaBank, the Bank’s DDRs are expected to be a superior, regulatory compliant alternative to current “stablecoins” for mainstream financial applications.
The expanded closed ecosystem testing, undertaken with VersaBank’s blockchain technology partner Stablecorp, adds US dollar-denominated DDRs (“VUSD”) (in addition to Canadian dollar-denominated DDRs (“VCAD”) as previously announced), the Algorand and Ethereum blockchains (in addition to the Stellar Blockchain as previously announced), as well as testing with a Receipt Distributor, who will become one of the primary distributors of the Bank’s DDRs at commercial launch.
“We are very pleased with the progress and outcomes to date of our Digital Deposit Receipt closed ecosystem testing, which is demonstrating that the DDR model is functioning as designed and managing digital assets in a secure, trusted and attestable manner,” said David Taylor, President and Chief Executive Officer, VersaBank. “VersaBank’s DDRs are a natural extension of our existing digital deposit services that, when placed on a public blockchain and supported by the security of the Bank’s own VersaVault digital asset security technology, become a completely unique, game changing, financial innovation.”
Mr. Taylor added, “Over the last several months, we have seen increasing calls in North America and globally from both the private and public sectors for oversight and regulation of private company-issued stablecoins. As a Schedule I (Federal) Bank with an investment grade rating, VersaBank’s DDRs are very well aligned with the direction that such regulation appears to be heading. We are proud to be the first mover in this space and are very enthusiastic about the potential of DDRs.”
Alex McDougall, President of Stablecorp commented, “Existing stablecoin models have run into significant challenges making headway into mainstream financial applications due to lack of transparency and regulatory oversight. DDRs are a “step-function” improvement over existing models and Stablecorp is proud to be the blockchain technology partner to VersaBank.”
“The Algorand Foundation is excited to see how this new, regulated approach to stable coins will accelerate crypto-currency adoption,” said Sean Lee, Chief Executive Officer, Algorand Foundation. “We’re delighted to continue supporting VersaBank and Stablecorp, as they drive world leading financial innovation on Algorand.”
To date, VersaBank and Stablecorp have successfully “minted” DDRs on the Stellar and Algorand blockchains, and designated VersaBank personnel have successfully used minted DDRs to conduct mock transactions. Supporting these activities, VersaBank and Stablecorp have fully integrated the Bank’s VersaVault digital asset security technology into the minting and burning workflow across all blockchains. Any and all VUSDs and VCADs minted within the closed ecosystem testing continue to be – at all times – in the control of VersaBank.
Concurrent with the expanded testing, VersaBank’s DDR system is undergoing a SOC (System and Organization Controls) 2 Audit, which is intended to verify the non-financial reporting controls, relating to security, availability, processing integrity, confidentiality and privacy of the system. The expanded closed ecosystem testing will continue until the completion of the SOC 2 Audit, following which VersaBank intends to commercially launch VCAD and VUSD, which is currently targeted for early 2022.