Custodia and Vantage Bank Launch Tokenised Deposit Platform

Custodia Bank and Vantage Bank have unveiled a groundbreaking blockchain-based platform that enables traditional banks to issue tokenised deposits.

Overview

The two banks stated on Thursday that this innovation allows banks to leverage the benefits of blockchain technology, including fast and low-cost transactions, while maintaining control over customer deposits. The platform provides a solution to the growing demand for digital financial services while maintaining regulatory compliance. 

The statement noted,

“The patent-protected framework is designed to provide institutions and their customers with the efficiencies and security of tokenisation while safeguarding core deposits from the risk of disintermediation.”

Bridging Traditional Banking and Blockchain

The newly launched platform facilitates the issuance of tokenised deposits backed by real US dollars held by banks. These digital representations of bank deposits are issued on a blockchain, offering the advantages of digital assets without requiring banks to relinquish control over customer funds. 

The tokens are designed to function as both tokenised deposits and stablecoins, providing banks with flexibility and ensuring they can meet regulatory standards. Custodia’s blockchain technology and Vantage’s Interlace network work together to create an interoperable platform for tokenised deposits. 

This system enables banks of all sizes to issue and manage tokenised deposits while ensuring compliance with the GENIUS Act, a US regulation governing stablecoins. The platform is designed to help financial institutions retain control over their deposits, thereby addressing the risks associated with the growing use of private stablecoins. 

Real-World Applications and Pilot Programs

Custodia and Vantage Bank are already running pilot programs to test their tokenised deposit platform in real-world applications. These pilots involve cross-border payments, milestone-based disbursements in construction, and supply chain settlements.

The programs aim to demonstrate the effectiveness of tokenised deposits in various sectors, providing practical examples of how banks can use blockchain technology to streamline operations. For instance, the cross-border payment pilot enables transportation companies to conduct faster and more cost-effective transactions across borders. 

Similarly, milestone-based disbursements for construction projects allow for more efficient payments that align with project milestones. These pilot programs showcase the potential for tokenised deposits to improve efficiency and security in financial transactions. 

A Step Toward the Future of Banking

As the financial sector increasingly embraces digital solutions, tokenised deposits offer banks an opportunity to stay competitive. With the stablecoin market estimated to reach $2 trillion by 2028, traditional banks face growing pressure to adapt to new technologies. 

Custodia and Vantage’s platform provides a solution that allows banks to integrate blockchain technology while maintaining control over customer deposits. This move is part of a broader trend of institutional adoption of blockchain and digital assets, which is reshaping the banking and financial services industries. 

The launch of tokenised deposits by Custodia and Vantage Bank marks a significant step forward in bridging the gap between traditional finance and the digital economy. By offering a secure, interoperable, and compliant platform, the two banks are paving the way for the future of banking in a digital-first world.