Banks are exploring tokenized deposits, testing ways to move commercial banks’ money to blockchain-based payment and settlement infrastructure, according to a modern report from data platform RWA.io.
The report, authored by RWA.io with input from industry participants including UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN Amro and Digital Asset, argues that tokenized deposits are emerging alongside stablecoins and central bank digital currencies as part of the broader onchain cash stack.
Tokenized deposits are a digital representation of customary bank deposits on a blockchain or other distributed ledger infrastructure. Unlike many stablecoins, they are direct obligations of the issuing bank and are subject to existing banking frameworks, including deposit insurance, capital requirements, and anti-money laundering and know-your-customer rules.
The report points to the growing number of pilot projects and banking implementations in Europe. In January, Lloyds Banking Group and Archax he said completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network, while UK Finance’s Great British Tokenised Deposit pilot is testing person-to-person market payments, remortgage and digital asset settlement by mid-2026.
The broader focus reflects how banks are trying to maintain their roles in payments, treasury and deposit taking as digital money instruments proliferate.
Tokenized deposits as a stablecoin measure, CBDC debate
A report by UK Finance states that tokenized deposits will play a key role in the future “multi-meter” world. The industry group said tokenized deposits would complement other forms of digital money, “including privately and potentially publicly issued monies.”
Related: BNY Launches Tokenized Deposits Amid TradFi’s Rush Towards Blockchain and Cryptocurrencies
Marko Vidrih, co-founder and chief operating officer of RWA.io, said that while most of the attention in digital money is focused on stablecoins or central bank digital currencies (CBDCs), the global financial system still relies on commercial bank money.
“Moving this money onto digital rails will underpin the next generation of digital finance,” Vidrih said. “For this reason, it is important to understand how tokenized deposits fit into the broader digital money ecosystem, alongside stablecoins and CBDCs.”
The ECB is expanding its digital work on the euro, builds tokenized money rails
The background of European politics is changing in parallel. The European Central Bank is making progress on a digital euro as US dollar-backed stablecoins continue to dominate digital asset markets and cross-border transactions.
The ECB recently made available to experts requests for input on work focusing on the functioning of the digital euro in ATMs, payment terminals and acceptance infrastructure. The ECB also stated that it intends to launch a 12-month digital euro pilot in the second half of 2027.
In March, the European Central Bank unveiled Appia, its long-term plan for how tokenized financial markets in Europe could operate using central bank money. A key part of this plan is Pontes, a modern settlement mechanism designed to enable blockchain-based financial platforms to connect to the existing Eurosystem payments infrastructure.
This existing infrastructure is known as TARGET Services and already supports large-value euro payments, securities settlements and instant payments across Europe. The ECB said Pontes is scheduled to launch in the third quarter of 2026 and that feedback from the Appia consultation process will support shape the broader framework for a European tokenized financial system.
Warehouse: Are DeFi creators responsible for other people’s illegal activities on their platforms?
