Tokenized Deposits Go Live: Custodia & Vantage Launch US Bank Network

Custodia and Vantage: A Tokenized Deposit Network for US Banks

Custodia Bank and Vantage Bank Texas have launched a live platform that allows banks to issue tokens representing insured deposits. This initiative expands on their previous pilot program and aims to create a nationwide network for US banks.

How it Works:

The platform essentially puts traditional bank money on a blockchain while maintaining all the existing protections and regulations. These tokens act like digital dollars, changing form depending on their location. When held by a participating bank, they are considered regular tokenized deposits, fully FDIC-insured and subject to banking regulations. However, when transferred to another institution or wallet, they function similarly to a stablecoin.

Caitlin Long, founder and CEO of Custodia Bank, explained that the network facilitates conversions through a patent-pending protocol that combines an on-chain oracle with off-chain operational controls. The platform utilizes Infinant's APIs and ledger infrastructure to manage the switching between token forms.

According to Long, the key is that the same token, issued via the same smart contract, can change its obligor and regulatory status as it moves through its lifecycle, without requiring redemption or conversion.

Breaking Down Barriers

Unlike the earlier proof-of-concept that tested Vantage's Avit token on Ethereum, this new rollout is designed for real-world transactions. The platform is built on a permissionless network, with initial test transactions utilizing Ethereum and plans to incorporate Bitcoin.

Custodia and Vantage are committed to tearing down walls and fostering open access and interoperability. This stance contrasts with the current trend where major stablecoin issuers and payment platforms often develop their own chains or push for proprietary systems.

The banks are building a compliant settlement layer that enables insured dollars to move at blockchain speed while maintaining safety. Dan Dadybayo, research and strategy lead at Unstoppable Wallet, highlights that this allows smaller institutions to compete on efficiency and programmability.

Key Takeaways:

• Custodia and Vantage have launched a live platform for tokenized deposits.
• The platform allows banks to issue tokens representing insured deposits, bridging the gap between traditional finance and blockchain.
• The tokens are FDIC-insured and comply with US banking laws.
• The platform aims to provide a faster, more efficient, and compliant payment network for banks.
• The platform awaits final regulatory approval to launch at scale.