Custodia and Vantage expand pilot to live tokenized deposit network for US banks

Custodia Bank and Vantage Bank Texas have unveiled a live tokenized deposit platform, expanding their previous pilot into a nationwide network for U.S. banks.

The new platform, announced Thursday, allows participating institutions to issue tokens representing insured deposits — essentially placing traditional bank money on a blockchain while keeping all the usual protections and regulations in place.

That also ensures that the tokens comply with US banking laws and the GENIUS Act, which recognizes certain bank-issued stablecoins as deposit instruments rather than securities.

How it works

The tokens are like digital dollars that can change shape depending on where they are located. When held by a participating bank, they are regular tokenized deposits that are fully FCIC insured and subject to banking regulations. But when they move to another institution or wallet, they behave like a stablecoin.

The network processes conversions via “a patent-pending protocol that includes both an on-chain oracle and off-chain operational controls,” Caitlin Long, founder and CEO of Custodia Bank, told me. Declutter.

The platform uses Infinant’s APIs and ledger infrastructure to manage form switching.

“The key is that the very same token, issued through the same smart contract, can change its debtor and its legal status as it goes through its life cycle without redeeming or converting the token,” Long said.

Breaking down walls

Unlike the previous proof-of-concept that tested Vantage’s Avit token on Ethereum, the new rollout is designed for real-world transactions.

When asked about the infrastructure this is based on, Long said the platform runs on a permissionless network. Three different test transactions used Ethereum earlier in March, while work was already underway on Bitcoin.

That design points to how Custodia and Vantage “share a philosophical commitment to tearing down walls, not building new ones,” Long said.

Such a stance on open access and interoperability appears to mark a departure from the status quo in which major stablecoin issuers and payment platforms either build their own chains or insist on proprietary systems.

“While most stablecoin issuers use omnibus legal structures that create their own legal frictions, we use a legal structure that supports interoperability within the law,” a frequently asked question Long shared in response to Decode reads questions.

What the two banks are building out opens up “a compliant settlement layer that moves insured dollars at the speed of blockchain” with “the same safety net, on new rails,” Dan Dadybayo, research and strategy lead at Unstoppable Wallet, told me. Declutter.

“The Fed can still see flows through participating banks, but for the first time smaller institutions can compete on efficiency and programmability,” Dadybayo explains. “As adoption grows, this could quietly become a parallel payments network built from within the system, not against it.”

Long clarified in a later statement that several banks have already committed to the platform, noting that the Federal Reserve invited Vantage CEO Jeff Sinnott to a community banking conference where the product was “teased.”

The platform is awaiting “final regulatory approval to launch at scale,” Long confirmed.