Bank

Long

Bitcoin

April

Crypto-friendly banks Custodia Bank and Vantage Bank have launched a turnkey blockchain solution allowing traditional banks to issue tokenized deposits that will work with stablecoins.
The solution enables banks to leverage blockchain’s near-instant, low-cost transactions in an interoperable manner with other banks while being able to retain customer deposits, the two banks <a href="https://www.prnewswire.com/news-releases/vantage-bank-and-custodia-announce-launch-of-tokenized-deposits-for-us-banks-302592931.html?tc=eml_cleartime" rel="noopener noreferrer nofollow" target="_blank">said</a> in a statement on Thursday.
<blockquote>
 “The patent-protected framework is designed to provide institutions and their customers with the efficiencies and security of tokenization while safeguarding core deposits from the risk of disintermediation.”
</blockquote>
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 Source: <a href="https://x.com/CaitlinLong_/status/1981429783322861795" rel="noopener noreferrer nofollow" target="https://x.com/CaitlinLong_/status/1981429783322861795">Caitlin Long</a> 
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Tokenized deposits are digital versions of bank deposits issued on a blockchain, representing real US dollars held by banks.&nbsp;
The initiative aims to address interoperability between crypto and traditional banking by introducing a single digital token that can function as both a tokenized deposit and a stablecoin.&nbsp;
The platform is accessible to banks of all sizes, which maintain control of their wallets containing tokenized deposits and <a href="https://cointelegraph.com/explained/what-does-the-us-genius-act-mean-for-stablecoins?utm_source=chatgpt.com" rel="noopener noreferrer nofollow">GENIUS Act-compliant stablecoins.</a>
The solution leverages Custodia’s bank-focused blockchain and payment platform Infinant’s Interlace network. It comes seven months after Custodia became the first bank to <a href="https://cointelegraph.com/news/custodia-bank-helps-execute-first-bank-issued-stablecoin-transaction-in-us?utm_source=chatgpt.com" rel="noopener noreferrer nofollow">issue tokenized deposits</a> on a <a href="https://cointelegraph.com/learn/articles/permissioned-blockchain-vs-permissionless-blockchain-key-differences?utm_source=chatgpt.com" rel="noopener noreferrer nofollow">permissionless blockchain</a> in the US with Vantage.
<h2 id="tokenized-deposits-compete-with-private-stablecoins">Tokenized deposits compete with private stablecoins</h2>
The current crypto bull market has been primarily fueled by institutional adoption, with banks and TradFi companies adopting a broad range of strategies to participate in the crypto space.
One of those areas of adoption has been stablecoins, a now $300 billion market which received a considerable boost by US President Donald Trump’s <a href="https://cointelegraph.com/news/donald-trump-stablecoin-law-signed?utm_source=chatgpt.com" rel="noopener noreferrer nofollow">signing of the GENIUS Act</a> in July.
However, <a href="https://cointelegraph.com/news/us-bankers-want-stablecoin-yield-loophole-closed?utm_source=chatgpt.com" rel="noopener noreferrer nofollow">banks have expressed concern</a> to regulators that stablecoin issuers and their affiliates offering interest and yield on deposits may undermine the traditional banking system.
Related: <a href="https://cointelegraph.com/news/trump-pardons-binance-founder-cz" rel="noopener noreferrer nofollow">Binance confirms CZ received presidential pardon from Trump</a>
The US Treasury in April estimated that the stablecoin market could reach <a href="https://cointelegraph.com/news/stablecoins-on-track-for-2-t-market-cap-by-2028-us-treasury?utm_source=chatgpt.com" rel="noopener noreferrer nofollow">$2 trillion by 2028</a> and lead to $6.6 trillion in banking deposit outflows.
For banks, tokenized deposits could help mitigate these outflows and preserve their competitive edge as the banking industry increasingly moves toward digital solutions.
<h2 id="custodia-s-solution-is-already-making-a-real-impact">Custodia’s solution is already making a real impact</h2>
Custodia is already running early pilot programs that leverage its dollar tokenization technology, including ones that enable cross-border payments for transportation companies and milestone-based disbursements in construction.&nbsp;
It is also supporting supply chain settlement for manufacturers and more flexible payroll options in service industries, it noted.
Magazine: <a href="https://cointelegraph.com/magazine/cliff-bought-2-homes-bitcoin-mortgage-clever-or-insane/" rel="noopener noreferrer nofollow">Cliff bought 2 homes with Bitcoin mortgages: Clever… or insane?</a>

Custodia, Vantage Bank launch platform for tokenized deposits

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