Versabank, a Canadian digital bank focused on business clients, has begun testing tokenized deposits that it says it offers a safer, compliant alternative to stubcoin.
The pilot runs through the bank's US subsidiary Versabank USA and will try out the US dollar version of the bank's blockchain-based digital deposit receipt (DDRS) technology. Each token in Branded USDVB represents one US dollar held in a deposit at Versabank USA.
The program simulates thousands of small value transactions first internally and then some external partners. Tokens are managed through the bank's digital vault and electronic wallet platform and issued in Ethereum ETH$4,588.03Algorand something$0.2530 And star XLM$0.3838 Blockchain.
Stablecoins, Crypto, have won tokens at prices tied to Fiat currencies like the US dollar, and while it has attracted most attention, banks are exploring tokenized deposits and using blockchain rails to make money transfers more efficient. Stablecoins like Circle's USDC and Tether's USDT support the value of Tokens with bookings that are typically issued by private companies and held by third-party custodians. Tokenized deposits, on the other hand, are the responsibility of the regulated bank and are subject to banking regulations.
Earlier this year, Custodia and Vantage banks tokenized Ethereum's US dollar demand deposits, while JPMorgan tested deposit tokens on Coinbase's Layer-2 network basis.
Unlike most stable coins, Versabank says that its tokens are federal insurance and can attract interest, functionally similar to traditional deposits, but with the added efficiency of blockchain-based settlements.
The bank said it expects to complete the pilot by the end of 2025 and will seek approval from the office of the Currency Secretary (OCC) before it is made public.
Read more: Stablecoins, Tokenization puts pressure on money market funds: Bank of America
