Banks are testing tokenized deposits to move commercial bank money onto blockchain-based payment and settlement rails, according to a report by real-world asset data platform RWA.io. The report, produced with input from industry participants including UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN AMRO and Digital Asset, positions tokenized deposits alongside stablecoins and central bank digital currencies (CBDCs) in an emerging onchain cash stack.
Tokenized deposits are digital representations of traditional bank deposits issued on blockchain or distributed ledger platforms. Unlike many stablecoins, they remain direct liabilities of the issuing bank and operate within existing banking frameworks—deposit insurance, capital rules, and AML/KYC regimes—rather than as privately collateralized tokens.
RWA.io highlights a growing set of bank pilots and deployments in Europe. 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 digital-asset settlement.
The push reflects banks’ desire to retain roles in payments, treasury and deposit-taking as new digital cash instruments proliferate.
Tokenized deposits as a middle ground in the stablecoin–CBDC debate
UK Finance says tokenized deposits will be an important element in a future “multi-money” environment, complementing both privately issued monies and potential public digital currencies. Marko Vidrih, co-founder and COO of RWA.io, noted that while discussion often focuses on stablecoins and CBDCs, the global financial system continues to run on commercial bank money. Moving that money onto digital rails, he said, will underpin the next generation of digital finance, making it important to understand how tokenized deposits fit alongside stablecoins and CBDCs.
ECB advances digital euro work and tokenized money rails
European policy developments are proceeding in parallel. The European Central Bank (ECB) is advancing work on a digital euro while US dollar–backed stablecoins continue to dominate digital asset markets and cross-border flows. The ECB has opened expert applications for workstreams on how a digital euro would function across ATMs, payment terminals and acceptance infrastructure, and it aims to start a 12-month pilot in the second half of 2027.
In March the ECB unveiled Appia, a long-term roadmap for tokenized finance in Europe that envisions using central bank money. A central feature is Pontes, a proposed settlement mechanism to connect blockchain-based financial platforms to the Eurosystem’s existing payment infrastructure—TARGET Services—which handles large-value euro payments, securities settlement and instant payments across Europe. Pontes is targeted for launch in the third quarter of 2026, and feedback from Appia’s consultation will help shape Europe’s broader tokenized finance framework.
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