The Bank of North Dakota (BND) announced Monday the launch of a pilot program for its new stablecoin, named Roughrider Coin. This initiative brings together four local banks and credit unions to study the potential advantages and disadvantages of this financial technology.
The program’s goal is for these financial institutions, guided by the state’s unique banking model, to gain insight into how stablecoins might streamline money transfers and enhance transaction efficiency within North Dakota. Don Morgan, CEO of the Bank of North Dakota, stated, "The way money moves is drastically changing," and emphasized that the bank is on the forefront of this change, expecting significant state benefits over the next decade.
Roughrider Coin is North Dakota’s branded stablecoin, a type of cryptocurrency that uses blockchain technology for transactions. Unlike cryptocurrencies with fluctuating values such as Bitcoin, stablecoins maintain a consistent value by being pegged to the U.S. dollar. Bob Herrington, CEO of North Star Community Credit Union, which originated in Benson County and operates 13 locations, clarified that "$1 of stablecoin is going to be worth $1." He further noted its primary use is for transactions due to its stability and increased security from blockchain technology, rather than for investment or appreciation.
The participating financial institutions in the pilot are Gate City Bank, First International Bank, Capital Credit Union, and North Star Community Credit Union. Fiserv, a Fortune 500 technology company that already provides services for BND, is also a partner. Ryan Goellner, executive vice president of Gate City Bank, expressed that participating provides an "opportunity to learn firsthand in that controlled environment," allowing them to understand stablecoin and its potential internal applications.
Currently, Roughrider Coin is not accessible to the general public or merchants. The pilot program's focus is exclusively on bank-to-bank transactions conducted behind the scenes. Morgan explained that limiting the program’s scope minimizes potential risks associated with the new financial technology in its initial stages. BND’s internal and external risk assessments have concluded that the preliminary Roughrider Coin program carries a low risk. The announcement, made at the Theodore Roosevelt Presidential Library in Medora, included news that BND had completed its first live transactions outside of a test environment, using the stablecoin to instantly transfer a penny between two partners. Morgan compared this event to a foundational shift in the banking world, akin to the introduction of the automobile.
Traditional systems for interbank money movement, such as ACH or wire transfers, can involve costs, daily deadlines, and take longer to complete, particularly for international transactions. Herrington illustrated the potential speed of stablecoin, suggesting that with Roughrider Coin, recipients could get funds "while I’m on the phone with them," a stark contrast to traditional methods that might delay transfers until the next morning if a cutoff is missed. BND hopes Roughrider Coin will serve as a quicker and more cost-effective alternative to these existing payment methods, though the full extent of its integration is a key area of study for the pilot.
Herrington noted that the impact on everyday banking customers is still "very, very far down the time horizon," but emphasized the importance of preparing for future developments in financial technology. While no immediate changes are expected for customers, Morgan suggested that long-term benefits could include extended daily transaction deadlines and quicker transaction times once the system is expanded to client levels. Karl Bollingberg, chair of BND’s advisory board, believes stablecoin could bring about changes as significant as those brought by internet banking. The Bank of North Dakota is proceeding with caution, without a fixed deadline for the pilot program. Morgan indicated plans to gradually include more banks and credit unions across the state, prioritizing safety and thoughtful implementation. The North Dakota Industrial Commission, chaired by Governor Kelly Armstrong, oversees BND and will receive regular updates on the program. Agriculture Commissioner Doug Goehring, a member of the commission, has advised the bank to proceed carefully.
