Tokenized Deposits Take Center Stage as Banks Race to Put Commercial Money Onchain

TLDR:

• RWA.io report names tokenized deposits a core layer in the emerging onchain cash stack alongside stablecoins and CBDCs.
• UK Finance is piloting tokenized deposits for peer-to-peer payments, remortgaging, and digital-asset settlement through mid-2026.
• Marko Vidrih says moving commercial bank money onto digital rails will power the next generation of digital finance.
• The ECB’s Pontes mechanism will connect blockchain platforms to Eurosystem infrastructure and is set to launch in Q3 2026.

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Tokenized deposits are gaining traction as major banks test new ways to move commercial bank money onto blockchain infrastructure.

A new report from RWA.io details how these instruments are emerging alongside stablecoins and central bank digital currencies.

Contributors include Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN Amro, and Digital Asset. Together, they argue that tokenized deposits now form a key layer in the growing onchain cash stack. European pilots are already underway.

Banks Drive Tokenized Deposit Pilots Across Europe

Tokenized deposits are direct bank liabilities covered by existing deposit insurance. They comply with Anti-Money Laundering and Know Your Customer rules, unlike many stablecoins.

This gives them a more regulated footing within existing banking frameworks. Banks therefore see them as a credible path for moving commercial money onchain.

In January, Lloyds Banking Group and Archax completed the UK’s first tokenized deposit transaction on a public blockchain. The deal ran on the Canton Network, marking a milestone for European banking.

UK Finance is also running its Great British Tokenised Deposit pilot through mid-2026. The program tests peer-to-peer payments, remortgaging, and digital-asset settlement use cases.

UK Finance said tokenized deposits will play a “vital role” in a future multi-money world. They will complement both private and publicly issued digital money, the group noted.

This positions them alongside stablecoins and CBDCs as core digital instruments. Banks are treating them as a bridge between traditional and digital financial infrastructure.

RWA.io co-founder Marko Vidrih noted the global financial system still runs on commercial bank money. “Bringing that money onto digital rails will underpin the next generation of digital finance,” he said.

He added that understanding where tokenized deposits fit within the broader ecosystem is critical. “It is important to understand how tokenized deposits fit within the broader digital money ecosystem alongside stablecoins and CBDCs,” Vidrih stated.

ECB Advances Digital Euro Alongside Tokenized Money Infrastructure

The European Central Bank is advancing digital euro work as dollar-backed stablecoins dominate cross-border transactions. The ECB recently opened applications for experts to join digital euro workstreams.

These cover how the currency would work across ATMs, payment terminals, and acceptance points. A 12-month digital euro pilot is planned for the second half of 2027.

In March, the ECB unveiled Appia, a long-term framework for Europe’s tokenized financial markets. It outlines how blockchain-based platforms could settle transactions using central bank money.

A key element is Pontes, a mechanism linking those platforms to Eurosystem payment infrastructure. Pontes is set to launch in the third quarter of 2026.

TARGET Services, the Eurosystem’s existing infrastructure, processes large-value euro payments and securities settlement. Pontes will extend this reach to distributed ledger-based platforms across the region.

Feedback from Appia’s consultation process will shape Europe’s wider tokenized financial framework. This shows European regulators are actively building rails for digital money.

The convergence of tokenized deposits, stablecoins, and CBDCs is reshaping global payment infrastructure. Banks are deploying tokenized deposits to protect their role in payments, treasury, and deposit-taking.

Each instrument is finding a distinct place in the evolving landscape. Together, they are laying the foundation for a multi-money digital financial system.

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