Banks are exploring tokenized deposits as they test ways to move commercial bank money onto blockchain-based payment and settlement infrastructure, according to a new report from real-world asset data platform RWA.io
The report, which was authored by RWA.io with contributions 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 a broader onchain cash stack.
Tokenized deposits are digital representations of traditional bank deposits on blockchain or other distributed ledger infrastructure. Unlike many stablecoins, they are direct liabilities of the issuing bank and sit within existing banking frameworks, including deposit insurance, capital requirements, and Anti-Money Laundering and Know Your Customer rules.
The report points to a growing set of bank pilots and deployments 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, while UK Finance’s Great British Tokenised Deposit pilot is testing person-to-person marketplace payments, remortgaging and digital-asset settlement through mid-2026.
The broader push reflects how banks are trying to preserve their role in payments, treasury and deposit-taking as digital cash instruments multiply.
Two-tier monetary system architecture. Source: RWA.io
Tokenized deposits as a middle ground in the stablecoin, CBDC debate
UK Finance said in the report that tokenized deposits will play a vital role in a future “multi-money” world. The industry group said tokenized deposits will complement other forms of digital money, “including privately and potentially publicly issued monies.”
Marko Vidrih, the co-founder and chief operating officer at RWA.io said that while much of the attention in digital money focuses on stablecoins or central bank digital currencies (CBDCs), the global financial system still runs on commercial bank money.
“Bringing that money onto digital rails will underpin the next generation of digital finance,” Vidrih said. “For that reason, it is important to understand how tokenized deposits fit within the broader digital money ecosystem alongside stablecoins and CBDCs.”
ECB advances digital euro work, builds tokenized money rails
The European policy backdrop is moving in parallel. The European Central Bank is advancing work on a digital euro as US dollar-backed stablecoins continue to dominate digital asset markets and cross-border transactions.
The ECB recently opened applications for experts to contribute to workstreams focused on how a digital euro would function across ATMs, payment terminals and acceptance infrastructure. The ECB has also said it aims to begin a 12-month pilot for the digital euro 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 work using central bank money. A key part of that plan is Pontes, a new settlement mechanism designed to let blockchain-based financial platforms connect to the Eurosystem’s existing payment infrastructure.
That existing infrastructure is known as TARGET Services, which already processes large-value euro payments, securities settlement and instant payments across Europe. The ECB said Pontes is scheduled to launch in the third quarter of 2026, while feedback gathered through Appia’s consultation process will help shape the wider framework for Europe’s tokenized financial system.
