Banks are actively testing tokenized deposits as a means to move commercial bank money onto blockchain-based payment systems. A new report, authored with input from major financial institutions, details how these digital representations of traditional deposits fit within existing banking regulations and form part of a growing “onchain cash stack” alongside stablecoins and central bank digital currencies.
Financial institutions are exploring tokenized deposits to transition commercial bank money onto blockchain infrastructure, according to a recent industry report. The document was authored with contributions from UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN Amro, and Digital Asset.
Tokenized deposits are digital representations of traditional bank deposits on distributed ledgers. Unlike many stablecoins, they remain direct liabilities of the issuing bank and operate within established regulatory frameworks.
The report highlights a series of bank pilots and deployments gaining traction in Europe. In January, Lloyds Banking Group and Archax said they completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network.
Meanwhile, the UK Finance Great British Tokenised Deposit pilot is testing various payment and settlement use cases through mid-2026. This broader push reflects how banks aim to preserve their role as digital cash instruments multiply.
UK Finance stated in the report that tokenized deposits will play a vital role in a future “multi-money” world. The group said they will complement other forms of digital money, including privately and potentially publicly issued monies.
Marko Vidrih, co-founder and COO at RWA.io, emphasized the foundational role of commercial bank money. “Bringing that money onto digital rails will underpin the next generation of digital finance,” Vidrih said.
European policy developments are advancing in parallel with these bank-led initiatives. The European Central Bank (ECB) is progressing work on a digital euro and recently opened applications for expert contributors.
In March, the ECB unveiled Appia, its long-term plan for tokenized financial markets using central bank money. A key component is Pontes, a new settlement mechanism designed to link blockchain platforms to the Eurosystem’s existing TARGET Services infrastructure.
The ECB said Pontes is scheduled to launch in the third quarter of 2026. Feedback from Appia’s consultation will help shape the wider framework for Europe’s tokenized financial system.
