Tokenized Deposit

A tokenized deposit is a digital representation of a traditional bank deposit, issued by a licensed bank and recorded on a blockchain. Like ordinary deposits, they provide a direct claim on the issuing bank and are fully backed by fiat held at the bank and regulated under standard banking rules.

How It Differs from Regular Deposits

Unlike regular deposits, tokenized deposits can be instantly transferred between parties, settled in real time, and programmed for advanced financial use through smart contracts on blockchain infrastructure. This enables payments that are faster than those using traditional deposits because they bypass intermediaries and legacy networks, operating 24/7 and supporting instant settlement, auditability, and advanced automation.

Key Features

• Bank-Issued: Created and redeemed exclusively by licensed banks
• Direct Claim: Represents a direct liability of the issuing bank, not a separate reserve pool
• Regulatory Oversight: Subject to standard banking regulation (capital requirements, deposit insurance, supervision)
• Blockchain-Based: Recorded on distributed ledger infrastructure for instant transfers
• Programmable: Can be integrated into smart contracts for automated payments and treasury operations

How It Differs from Stablecoins and CBDCs

vs. Stablecoins: Tokenized deposits are direct bank liabilities regulated under banking law, while stablecoins are typically issued by non-bank entities under money transmission or payments regulation. Tokenized deposits may offer deposit insurance (e.g., FDIC in US), while stablecoins generally do not.

vs. CBDCs: Tokenized deposits are commercial bank liabilities, while CBDCs are central bank liabilities. Tokenized deposits operate within existing banking infrastructure and regulation, while CBDCs represent new central bank-issued digital currency.

Why It Matters

Tokenized deposits bridge traditional banking and blockchain infrastructure, offering regulated financial institutions a pathway to blockchain-based payments without requiring new regulatory frameworks. For corporate treasurers, they enable programmable payments, real-time settlement, and 24/7 treasury operations while maintaining the security and regulatory protections of traditional bank deposits.

Major banks including JPMorgan, Citibank, and HSBC are piloting tokenized deposit systems for institutional clients, particularly for supply chain finance, cross-border payments, and automated treasury management.