Major banks are actively exploring tokenized deposits as a way to move commercial bank money onto blockchain-based payment and settlement systems, according to a new report from real-world asset data platform RWA.io. The report was produced with contributions from institutions including UK Finance, Citi, BNY, JPMorgan‘s Kinexys, Standard Chartered, ABN Amro, and Digital Asset. It positions tokenized deposits as an emerging component of a broader digital cash ecosystem alongside stablecoins and central bank digital currencies.
Tokenized deposits are digital representations of conventional bank deposits recorded on blockchain or distributed ledger infrastructure. Unlike many stablecoins, they remain direct liabilities of the issuing bank and operate within established regulatory frameworks, including deposit insurance, capital requirements, and Anti-Money Laundering and Know Your Customer rules. This regulatory grounding is seen as a key distinction that could make them more compatible with existing financial systems.
The report highlights a growing number of bank pilots across Europe. In January, Lloyds Banking Group and Archax announced the completion of the United Kingdom’s first public blockchain transaction using tokenized deposits on the Canton Network. Separately, UK Finance’s Great British Tokenised Deposit pilot is testing use cases including person-to-person marketplace payments, remortgaging, and digital-asset settlement, with trials running through mid-2026.
The broader effort reflects banks’ attempts to maintain their central role in payments, treasury operations, and deposit-taking as digital cash instruments continue to multiply. UK Finance stated in the report that tokenized deposits will play a vital role in a future described as a “multi-money” world. The industry group said they will complement other forms of digital money, including both privately and potentially publicly issued currencies.
Marko Vidrih, co-founder and chief operating officer at RWA.io, noted that while stablecoins and central bank digital currencies attract significant attention, the global financial system continues to run primarily on commercial bank money. He said that bringing that money onto digital infrastructure will form the foundation of the next generation of digital finance. Vidrih emphasized the importance of understanding how tokenized deposits fit within the wider digital money ecosystem alongside stablecoins and CBDCs.
European policy developments are advancing in parallel. The European Central Bank is progressing work on a digital euro as US dollar-backed stablecoins maintain dominance in digital asset markets and cross-border transactions. The ECB has recently opened applications for experts to contribute to workstreams examining how a digital euro would function across ATMs, payment terminals, and acceptance infrastructure, with a 12-month pilot targeted for the second half of 2027.
In March, the ECB unveiled Appia, its long-term framework for how tokenized financial markets in Europe could operate using central bank money. A central element of that plan is Pontes, a new settlement mechanism designed to connect blockchain-based financial platforms to the Eurosystem’s existing payment infrastructure, known as TARGET Services. TARGET Services currently handles large-value euro payments, securities settlement, and instant payments across Europe, and Pontes is scheduled to launch in the third quarter of 2026.
Originally reported by CoinTelegraph.
