Custodia Bank and Vantage Bank have teamed up to launch a blockchain-based service that helps traditional banks create and manage digital versions of customer deposits.
According to the announcement, these digital deposits are designed to work alongside stablecoins.
With this platform, banks can use blockchain to send money quickly and at a lower cost, without having to send customer funds outside their systems.
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The system is built on a patented framework. Its goal is to offer the benefits of digital money, such as faster transactions and stronger security, while protecting banks from losing deposits to third-party platforms.
Tokenized deposits are digital versions of regular bank balances. They are stored on a blockchain but still represent real dollars held by a bank.
The service is open to banks of any size. Each bank keeps full control over its own digital wallets and the tokens issued through the platform. These tokens also comply with existing regulations, including those in the GENIUS Act, which help ensure compliance and safety.
Custodia has already started testing this system through several pilot programs. Some early uses include cross-border payments for trucking companies, scheduled payment releases in construction, and digital settlement tools for manufacturers.
Another use case involves offering more flexible payment schedules for workers in industries like hospitality or cleaning services.
Recently, UK Finance piloted tokenized sterling deposits, known as GBTDs, in collaboration with six major UK banks. What is the goal of this program? Read the full story.
