Custodia Bank and Vantage Bank have introduced a new blockchain-based system that allows traditional banks to issue tokenised deposits, aiming to make transactions faster while keeping customer funds secure.
The banks said the patent-protected system is designed to give institutions and their clients the benefits of tokenisation without risking customer deposits. It helps banks modernise their operations using blockchain technology while maintaining full control over their funds.
“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,” the banks said in a press release.
Tokenised deposits are digital versions of regular bank deposits, backed by U.S.dollars held in banks. The new platform allows banks to use a single digital token that functions both as a tokenised deposit and a GENIUS Act-compliant stablecoin.
The platform runs on Custodia’s blockchain network and Infinant’s Interlace system, and is open to banks of all sizes. It follows Custodia’s milestone earlier this year as the first U.S. bank to issue tokenised deposits on a permissionless blockchain, with support from Vantage Bank.
The development comes to light as banks face growing competition from private stablecoin issuers, a market now worth around $300 billion.
Since the GENIUS Act was signed by President Donald Trump in July, the stablecoin industry has seen rapid growth. According to The U.S. Treasury, the market could reach $2 trillion by 2028.
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