press release<\/a> said.<\/p>\nFor those unaware, tokenized deposits are digital representations of real bank deposits that are recorded on a blockchain.<\/p>\n
A compliant platform for tokenized deposits<\/h1>\n
The unnamed platform operates on a \u201cpatent-protected framework\u201d that allows banks to issue digital tokens functioning as both tokenized deposits and stablecoins, leveraging blockchain technology\u2019s speed and cost efficiency without banks having to relinquish control or expose themselves to the \u201crisk of disintermediation.\u201d<\/p>\n
Vantage Bank, working in partnership with Custodia, has invited banks and credit unions to \u201cjoin the consortium\u201d that will allow them to \u201csecurely tokenize deposits while maintaining full control of [their] own wallet for both tokenized deposits and payment stablecoins.\u201d<\/p>\n
The wallets are hosted on Custodia\u2019s \u201cbank-grade blockchain platform,\u201d which, as previously reported by crypto.news, received the SOC 2 Type II compliance certification. SOC 2 is a cybersecurity compliance framework by the American Institute of Certified Public Accountants that provides an audit and report on an organization\u2019s internal security controls.<\/p>\n
<\/p>\n
The new solution also leverages payment platform Infinant\u2019s Interlace network and offers financial institutions of any size a way to issue and manage compliant digital tokens, especially as Custodia is a permitted payment stablecoin issuer under the GENIUS Act.<\/p>\n
\u201cBy ensuring tokens remain within the banking environment, the model helps preserve the advantages of tokenization while encouraging deposits to remain in, or return to, the issuing institution,\u201d the banks said.<\/p>\n
The platform has been in the works since early 2023 and has already been tested through a series of pilot programs focused on real-world use cases, such as cross-border payments, supply chain settlement for manufacturers, and flexible payroll options for service sector businesses, among others.<\/p>\n
U.S. Banks push back against stablecoins<\/h2>\n
Earlier this year, several major U.S. banking groups began urging lawmakers to amend the GENIUS Stablecoin Act, warning that the legislation contains a rewards loophole that could allow crypto platforms to offer yield-like incentives and draw deposits away from traditional banks.<\/p>\n
Groups such as the American Bankers Association and the Bank Policy Institute argued that the Act, while prohibiting stablecoin issuers from paying interest, does not clearly restrict exchanges or other intermediaries from offering rewards tied to stablecoin holdings.<\/p>\n
Coinbase, one of the largest crypto exchanges in the U.S., dismissed those concerns last month, arguing that banks are more concerned about protecting their multi-billion dollar revenue that is generated via annual payment processing fees.<\/p>\n
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