BISMARCK — Bankers, public officials, and academics are feeling a mix of optimism and caution after the Bank of North Dakota revealed its plans for a new digital currency.
On Wednesday, October 8, the state-run bank introduced Rough Rider Coin, a stablecoin tied to the US dollar’s value, aimed at enabling near-instant bank transfers.
In contrast to Bitcoin, stablecoins maintain their value because they’re backed by traditional assets, overwhelmingly the US dollar, so they avoid extreme price swings.
During a conference centered on financial innovations, leaders from the North Dakota Bank highlighted the significance of this announcement.
“This is a forward leap in technology. Rough Rider Coin can really open doors for our financial institutions,” remarked Rick Clayburgh, president of the North Dakota Bankers Association.
Sarah Getzlaf, CEO of Security First Bank of North Dakota, mentioned that some banks were exploring stablecoin technology even before the Bank of North Dakota’s announcement.
“We’re interested in learning more about Rough Rider Coin as we dive deeper into stablecoins,” said Getzlaf.
Alexis Baxley, president of the North Dakota Independent Community Bank, expressed enthusiasm about collaborating with the North Dakota Bank for insights into Rough Rider Coin’s initiatives.
“There are always fine details to consider. If they handle risk well, I think we’re keen to see its outcomes,” Baxley added.
State Senator Dale Patten, a Watford Republican and former banker, stressed the importance of understanding these new concepts in the banking industry.
“This can be quite baffling for many people,” Patten admitted. “I believe it’s crucial to cultivate a basic understanding of how it operates.”
Ali Jafri, an assistant professor of finance at North Dakota State University, attended the announcement to gather insights for an upcoming course. He emphasized the need for financial institutions to embrace new technologies to stay competitive.
“This is where things are headed, so adaptation is key,” he noted. “Otherwise, staying relevant in this fast-moving field can be quite challenging.”
One concern regarding stablecoins revolves around their potential effects on bank balance sheets if widely adopted by the public.
The Genius Act, signed into law by President Trump in July, mandates that every issued stablecoin must have reserves equivalent to traditional assets like the U.S. dollar or Treasury bills to ensure adequate liquidity for exchanges.
“There are apprehensions in the banking sector about potential deposit drains, not just in North Dakota but nationwide, which could lead to issues for banks. Deposits are vital for lending,” Clayburgh commented.
Currently, there are around $300 billion worth of stablecoins in circulation. U.S. Treasury Secretary Scott Bessent testified earlier this year that the market could exceed $2 trillion by 2028.
Lise Kruse, commissioner of the North Dakota Department of Financial Institutions, acknowledged national concerns regarding this situation.
“Stablecoins require dollar-for-dollar reserves. Where do these reserves originate from? Are they pulling $1.7 trillion from the banking system?” Kruse questioned. “Banks nationwide are understandably apprehensive since that capital wouldn’t be available for loans.”
Clayburgh pointed out that reductions in deposits could affect local economies, impacting small businesses and farmers. “We’re working to grasp these challenges,” he added.
Bank officials indicated that the initial launch of Rough Rider Coin, planned for next year, would be a pilot program. They assured that it wouldn’t affect liquidity at the Bank of North Dakota.
Don Morgan, the president and CEO of the Bank of North Dakota, noted that the pilot would be limited in scope, reserved for bank-to-bank transactions involving a select group of local partners.
“We foresee no major liquidity challenges for either North Dakota Bank or our banking sector in the near future,” Morgan explained at a press conference following the announcement.
Takis Georgakopoulos, COO of Fiserv—partnering with the Bank on Rough Rider Coin—explained that stablecoins could enhance fund transfers between banks.
“Transactions could occur 24/7 with minimal disruption,” Georgakopoulos stated. He also mentioned that liquidity issues could be addressed if Rough Rider Coin is made available to the public, adding, “We’re committed to collaborating with the Bank of North Dakota to find the best approach.”
The initial application for Rough Rider Coin will focus on interbank dealings, allowing near-instantaneous money movement, even outside standard business hours. Morgan remarked, “There’s significant value here, even without broad consumer adoption.”
However, the Bank of North Dakota plans to prepare for eventual consumer access to Rough Rider Coin, engaging with local partners to ensure that banks and credit unions can offer their customers viable options in the future.
“This initiative will position our banking and credit union sectors to navigate upcoming changes,” Morgan affirmed.
Kruse feels confident about the North Dakota banking sector’s capacity to manage risks tied to new financial technologies like stablecoins.
“Risk is simply part of the equation,” Kruse remarked. “Banks have long been adept at managing it.”
Morgan further clarified that the Bank of North Dakota uses state government deposits to fund loans, keeping risks in check.
“We’re not looking to put ourselves in high-risk situations. This isn’t seen as a high-risk venture; interbank transactions carry a much lower risk profile,” Morgan concluded.
