Over the past few years, a significant pathway for blockchain to enter financial markets has been converting traditional assets such as government bonds, funds, and stocks into on-chain assets. However, just because assets can be traded on-chain does not mean payment and asset delivery can be synchronized: what currency will the buyer use to pay? How is the funding linked to the asset delivery?
Recently, banks in the United States, the United Kingdom, and Canada have progressively advanced tokenized deposits; in Europe, tokenized asset trading is being integrated into central bank money settlement systems. Although their approaches differ, they all point to the same issue: as assets move on-chain, the concept of “money” within the financial system must also find a way to connect with it.
Banks are taking action
On September 24, The Clearing House, a U.S. payment clearing organization, announced it has selected the fintech company Quant to provide technical support for its On-Chain Money Initiative. The project aims to build an interbank network enabling participating institutions to clear and settle tokenized deposit transactions, while integrating with existing RTP real-time payment networks and CHIPS large-value payment clearing systems. Quant will provide technical capabilities including network interoperability, transaction orchestration, and transaction management. According to current plans, the network is expected to open to participating financial institutions in the first half of 2027.
On the same day, the UK financial industry body UK Finance announced further progress: the Great British Tokenised Deposit (GBTD) project, involving seven banks, has completed its first real customer transactions using tokenised pound deposits. Participating institutions include Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest, and Santander, with transactions executed through a shared platform developed by Quant.
These transactions are not simply transfers of funds from one account to another. In a transaction where a consumer purchases goods from a private seller, the buyer’s funds are held until the goods are successfully delivered, at which point they are released; in two refinancing transactions, funds are also released upon transaction completion according to predefined conditions. Payments can thus be aligned with the progress of the transaction, but reliable confirmation mechanisms are still required to verify whether real-world conditions have been met.
On September 22, six major Canadian banks announced they are jointly exploring a Canadian dollar tokenized deposit solution. The first phase of the project focuses on how tokenized deposits can move between different financial institutions, with the long-term goal of connecting with other digital asset initiatives. It is currently still in the exploration stage and not at the same level of development as completed real customer transactions in the UK.
Europe’s approach is different. On September 21, the Eurosystem launched Pontes, enabling wholesale trading of tokenized assets to be settled using central bank money. Pontes is not a tokenized deposit project, but it addresses the same type of need: how to connect settlement funds to the existing monetary system when assets are traded on a distributed ledger.
What is tokenized deposit?
Tokenized deposits can be understood as a digital representation and transfer method for commercial bank deposits. The underlying basis remains the deposit relationship between the customer and the bank, but new ledgers and technical arrangements enable deposits to circulate within corresponding networks and support conditional payment functions. The specific legal structure, recording methods, and applicable protections depend on the individual project and its regulatory framework in the relevant jurisdiction.
It may appear similar to stablecoins, but the difference lies in the source of the “money.” Stablecoins are typically issued by an issuer and maintain a value relationship with fiat currency through mechanisms such as reserve assets; tokenized deposits, on the other hand, represent deposits within the commercial banking system. Both may be used for digital payments, but their issuing entities, rights relationships, and use cases are not entirely identical.
Banks are interested in tokenized deposits not merely to reformat existing deposits in a new way, but for the more valuable capability of linking payments with transaction conditions: funds can be locked until specified conditions are verified and then released. The GBTD transaction in the UK demonstrates this capability in applications such as commodity trading and refinancing. If future asset delivery, condition verification, and payment processes can be more seamlessly integrated, certain workflows requiring repeated confirmations and information transfer across systems could be significantly simplified.
Connection is key
A bank’s ability to represent and transfer deposits within its own system is just the first step. The greater challenge lies in how funds from Bank A can securely and efficiently reach Bank B; how different ledgers can recognize the same transaction; and how on-chain payments can integrate with existing payment networks, asset trading platforms, and central bank settlement systems.
If each institution builds its own closed network, the financial market may simply end up with a new set of "data silos." This is also why recent projects have repeatedly emphasized interoperability.
Projects in the U.S. aim to connect tokenized deposit networks with RTP and CHIPS; Canada is first studying interbank settlement; the U.K. verifies real transactions across institutions through a shared platform; and Europe’s Pontes takes another approach by linking tokenized asset trading with central bank money settlement. Though they do not follow identical technological paths, all are addressing the challenge of connecting funds, assets, and existing financial infrastructure.
Will stablecoins be replaced?
It is still too early to draw this conclusion. Stablecoins are already being used in scenarios such as cryptocurrency trading and on-chain finance; tokenized deposits, which are based on bank deposit relationships, can more easily integrate with banks’ existing accounts, compliance, and payment systems. Central bank money plays a different role in final settlement between financial institutions.
What is more likely in the future is not a single digital currency dominating all scenarios, but rather multiple forms of funds operating within their respective networks and gradually establishing connections. Whether this can be achieved depends on common standards, cross-institutional collaboration, risk control, and real-world cost and efficiency.
In the past, RWA discussions focused on “which assets can be tokenized.” Today, a more specific question has emerged: Can the settlement funds keep up once the assets are on-chain?
From real customer trading in the UK, to exploring interbank networks in the US and Canada, to connecting central bank money with tokenized asset settlement in Europe, financial institutions are seeking answers separately. The next phase of blockchain finance may not depend on how many new assets appear on-chain, but on whether assets, funds, and existing financial systems can reliably complete every settlement.