Custodia Bank and Vantage Bank Texas have unveiled a live platform for tokenized deposits, expanding their previous pilot to a nationwide network for US banks.
The new platform, announced Thursday, allows participating institutions to issue tokens representing insured deposits, essentially putting traditional bank money on a blockchain while maintaining all the usual protections and regulations.
This also makes the tokens compliant with US banking laws and the GENIUS Act, which recognizes certain bank-issued stablecoins as depository instruments rather than securities.
Tokens are like digital dollars that can change shape depending on where they are located. When held by a participating bank, they are regular tokenized deposits that are fully insured by the FCIC and governed by banking rules. But when moved to another institution or wallet, they behave like a stablecoin.
The network handles conversions through “a patent-pending protocol that involves both an on-chain oracle and off-chain operational controls,” said Caitlin Long, founder and CEO of Custodia Bank. Decipher.
The platform uses Infinant’s APIs and ledger infrastructure to manage switching between forms.
“The key is that the same token, issued through the same smart contract, can change its debtor and regulatory status as it progresses through its lifecycle without redeeming or converting the token,” Long said.
Unlike the previous proof of concept that tested Vantage’s Avit token on Ethereum, the new launch is designed for real-world transactions.
When asked about the infrastructure it is based on, Long said the platform runs on a permissionless network. Three different test transactions used Ethereum in early March, and work on Bitcoin is already underway.
That design signals how Custodia and Vantage “share a philosophical commitment to tearing down walls, not building new ones,” Long said.
This stance in favor of open access and interoperability appears to mark a departure from the status quo in which major stablecoin issuers and payment platforms are building their own chains or pushing proprietary systems.
“While most stablecoin issuers use general legal structures that create their own legal frictions, we use a legal structure that supports interoperability within the law,” a FAQ shared by Long in response to Decipher questions read.
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What the two banks are building opens up “a compatible settlement layer that moves secured dollars at blockchain speed” with the “same security network, on new rails,” said Dan Dadybayo, research and strategy lead at Unstoppable Wallet. Decipher.