Banks are increasingly piloting tokenized deposits to shift commercial bank money onto blockchain-based payment and settlement rails, according to a report from RWA.io. The study, compiled with input from industry participants including UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN AMRO and Digital Asset, frames tokenized deposits alongside stablecoins and central bank digital currencies (CBDCs) in an emerging onchain cash stack.
Tokenized deposits are blockchain representations of traditional bank deposits issued by banks on distributed ledgers. Unlike many stablecoins, they remain direct liabilities of the issuing bank and operate inside existing banking frameworks—deposit insurance, capital rules and AML/KYC—rather than as privately collateralized tokens.
RWA.io points to a growing slate of European pilots and early deployments. In January, Lloyds Banking Group and Archax completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network. UK Finance’s Great British Tokenised Deposit pilot is running tests through mid-2026 that include person-to-person marketplace payments, remortgaging and settlement of digital-asset transactions.
The move reflects banks’ desire to preserve their roles in payments, treasury services and deposit-taking as new digital cash instruments proliferate. Tokenized deposits are being presented as a middle ground between privately issued stablecoins and public CBDCs: they can bring commercial bank money onto programmable rails while remaining embedded in regulated banking structures.
RWA.io co-founder Marko Vidrih emphasizes that conversations often focus on stablecoins and CBDCs, but the global financial system still runs on commercial bank money. Shifting that money to digital rails, he argues, will underpin the next generation of digital finance and makes understanding tokenized deposits’ place beside stablecoins and CBDCs important.
European policy work is advancing in parallel. The European Central Bank is progressing digital euro preparations while US dollar–backed stablecoins continue to dominate current digital-asset markets and cross-border flows. The ECB has opened expert applications for workstreams exploring how a digital euro would function across ATMs, payment terminals and merchant acceptance, and it aims to start a 12-month pilot in the second half of 2027.
In March the ECB published Appia, a long-term roadmap for tokenized finance in Europe that envisions using central bank money. A central proposal is Pontes, a settlement mechanism to link blockchain-based financial platforms to the Eurosystem’s existing TARGET services, which handle large-value payments, securities settlement and instant euro payments; Pontes is targeted for launch in the third quarter of 2026. Feedback from Appia’s consultation will help shape Europe’s broader tokenized finance framework.
This summary is based on reporting from Cointelegraph; readers should verify details independently and consult the original article and source documents for further information.