Banks push tokenized deposits amid growing competition in onchain cash systems, with pilots underway in Europe.
Banks are testing tokenized deposits to integrate commercial bank money into blockchain-based payment systems, according to a report from RWA.io. The report includes contributions from organizations such as UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN Amro, and Digital Asset.
Tokenized deposits represent traditional bank deposits on blockchain infrastructure and are direct liabilities of the issuing bank. They comply with existing regulations, including deposit insurance, capital requirements, and anti-money laundering rules.
European Pilots and Deployments
In January, Lloyds Banking Group and Archax completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network. UK Finance is also running a pilot through mid-2026 to test applications in person-to-person payments, remortgaging, and digital-asset settlement.
This push allows banks to maintain their roles in payments, treasury, and deposit-taking as digital cash options expand. UK Finance stated that tokenized deposits will play a vital role in a future multi-money system alongside other digital assets.
RWA.io’s co-founder Marko Vidrih emphasized that commercial bank money remains central to the global financial system, and digitizing it will support the next generation of digital finance.
The European Central Bank is progressing with its digital euro plans, including opening applications for experts to contribute to implementation across ATMs and payment terminals. The ECB aims to start a 12-month pilot in the second half of 2027.
In March, the ECB introduced Appia, a framework for tokenized financial markets, and Pontes, a settlement mechanism to connect blockchain platforms to existing euro payment infrastructure. Pontes is set to launch in the third quarter of 2026, enhancing Europe’s tokenized financial system.
