Tokenised Deposits & On-Chain Settlement
Banks answered stablecoins by putting their own money on ledgers: deposit tokens that stay ordinary bank deposits, settled between banks in central bank money that is itself becoming reachable from DLT. This guide is the engineer's view of that stack — the three kinds of on-chain money, how an interbank deposit-token payment actually settles, which networks are live, and what changes for atomicity, finality, ISO 20022 and reconciliation.
Three kinds of on-chain money
"Tokenised money" covers three instruments with different issuers, legal claims and holders. Mixing them up is the most common design mistake, because the token mechanics look the same while the settlement and risk properties do not.
| Payment stablecoin | Tokenised deposit | Tokenised central bank money | |
|---|---|---|---|
| Issuer | Licensed stablecoin issuer (non-bank or bank subsidiary) | A commercial bank | A central bank (wholesale CBDC, tokenised reserves) |
| What you hold | A claim on the issuer, backed 1:1 by a segregated reserve | A bank deposit — the same liability as an account balance, recorded on a ledger | A claim on the central bank — settlement money for banks |
| Protection | Reserve rules and redemption rights (GENIUS Act, MiCA) | Bank regulation, capital and deposit insurance as for any deposit | No credit risk |
| Who holds it | Anyone the issuer and the chain allow, often bearer-like | The bank's KYC'd clients | Banks and eligible institutions only |
| Interest | Not paid to holders (GENIUS Act) | Can pay interest like any deposit | Per central bank policy |
| Typical ledger | Public chains (Ethereum, Solana, Base…) | Permissioned ledgers, increasingly also public chains | Central bank systems linked to DLT platforms |
| Moves between issuers by | Itself — the same token everywhere | Interbank settlement: the payer bank's tokens are burned, the payee bank's minted | RTGS / the central bank's own ledger |
The US makes the split explicit: the GENIUS Act's definition of a payment stablecoin excludes deposits, including deposits recorded on a distributed ledger, and the OCC's March 2026 implementing proposal keeps that line. A bank's deposit token is regulated as a deposit, not as a stablecoin. In the EU a stablecoin pegged to one currency is an e-money token under MiCA; a tokenised deposit stays a deposit.
How an interbank deposit-token payment settles
Inside one bank a deposit token is simple: the bank mints tokens against a client's balance and burns them on redemption, and transfers between its own clients settle on the bank's ledger at once. The hard part is a payment between two banks, because each bank can only issue its own liabilities. A typical flow:
- Instruction — the payer's client instructs a transfer to a client of another bank, through an API or a wallet on the shared ledger.
- Burn — the payer bank debits the client and burns (or locks) the equivalent deposit tokens.
- Interbank settlement — the payer bank pays the payee bank in settlement money: reserves at the central bank (via RTGS, or tokenised reserves on the same platform), or a correspondent balance.
- Mint — the payee bank mints its own deposit tokens to the beneficiary's wallet and credits the account.
- Notify and reconcile — both banks report the movement to their clients and reconcile the ledger with the core banking system.
Steps 2–4 are where networks differ. On a shared platform with tokenised central bank money they run as one atomic transaction: all legs happen or none do. Without it, the burn and mint are linked to an RTGS payment with timeouts and compensating actions — the same failure modes as a correspondent payment, only faster. That is why central bank money on DLT (next sections) matters as much as the deposit tokens themselves.
Live networks and pilots (October 2026)
- JPMorgan Kinexys (formerly Onyx) — wholesale deposit-token transfers for the bank's institutional clients since 2020. JPMD, its USD deposit token on Coinbase's public Base network, launched in November 2025 for institutional clients — the first major bank deposit token on a public chain.
- Citi Token Services — tokenised deposits for Citi's institutional clients, used for 24/7 cross-border liquidity and treasury moves between Citi entities.
- HSBC Tokenised Deposit Service — launched in Hong Kong in May 2025 with Ant International as the first client, for treasury transfers between a client's own entities.
- Partior — a shared interbank platform whose settlement banks include JPMorgan, DBS, Standard Chartered and Deutsche Bank, settling USD, EUR and SGD in production.
- US shared network — JPMorgan, Citi, Bank of America, Wells Fargo and other US banks announced on 5 June 2026 a shared tokenised-deposit network operated by The Clearing House, targeting the first half of 2027.
- UK tokenised sterling deposits (GBTD) — a UK Finance live pilot with Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander, testing marketplace payments, remortgaging and digital-asset settlement; it grew out of the UK Regulated Liability Network experiments.
- Swift shared ledger — Swift's 24/7 ledger for tokenised deposits, in live pilot with 17 banks since July 2026; see the Swift shared ledger guide.
Central bank money reaches DLT
Interbank settlement in central bank money is what makes deposit tokens safe to accept from another bank. Three efforts bring it to tokenised platforms:
- Pontes (Eurosystem) — links DLT platforms with the Eurosystem's TARGET Services so euro transactions on those platforms settle in central bank money. The ECB set the two-track plan in July 2025 and launched Pontes in September 2026, for financial institutions and market infrastructures rather than consumers.
- Appia (Eurosystem) — the long-term track: how an integrated, tokenised European financial ecosystem should be built, with a blueprint expected in 2028.
- Project Agorá (BIS) — seven central banks and over 40 private firms on one programmable platform holding tokenised reserves and tokenised deposits for cross-border payments. Its May 2026 report found that atomic settlement across currencies and jurisdictions works, and the project moves to real-value testing.
- Fnality — a privately run payment system whose balances are fully backed by central bank deposits; its sterling system began operating in December 2023, with USD and EUR pending approval.
Retail CBDCs such as the digital euro are a separate track for consumers; see the CBDC flow simulator.
What changes for engineers
Atomic settlement replaces sequencing
Delivery-versus-payment (a tokenised bond against cash) and payment-versus-payment (USD against EUR) become a single ledger transaction instead of two legs coordinated by cut-offs, so principal risk disappears from the flow. The price is liquidity: both legs must be funded before the transaction runs, so intraday liquidity moves from the end of the day to the moment of settlement.
Finality is a legal question, not a block count
On a permissioned ledger the operator's rulebook defines when a transfer is final — the equivalent of settlement-finality protection for a payment system. On public chains (JPMD on Base) technical finality comes from the chain, but the legal claim is still the deposit at the bank. Model both, and never treat a token transfer as reversible the way a card transaction is.
24/7 meets cut-off times
Deposit tokens move at weekends; RTGS systems, FX desks and core banking batch runs often do not. Systems need positions that keep accruing across the weekend and limits on how much can move before interbank settlement is available again — the same gap card settlement has (see Settlement & Clearing).
ISO 20022 stays the business language
The ledger carries value; payment data still travels as ISO 20022. Interbank legs map to pacs.008 / pacs.009, returns to pacs.004 and client reporting to camt.054 notifications and camt.053 statements, with the token transaction hash as an extra reference to reconcile. Structured addresses, UETRs and remittance data matter as much as on Swift — validate them before they reach the ledger.
Programmability, with limits
Conditional payments (pay when goods are delivered, release escrow when a document is signed) are the main business case. They run as smart contracts the bank or network controls, not code any client can deploy, and every condition still needs KYC'd parties and sanctions screening.
Reconciliation across two ledgers
The core banking ledger stays the books of record; the token ledger mirrors it. Every mint and burn must match an account movement, and breaks — a token minted without a debit, a burn that never settled — are the operational risk to monitor.
Stablecoin or deposit token?
- Deposit tokens fit when both sides bank with participating banks: corporate treasury, intercompany liquidity, securities settlement, interbank payments. Funds keep paying interest and stay on the balance sheet.
- Stablecoins fit when the counterparty is outside the banking network or on a public chain: crypto platforms, wallets, machine payments (x402), emerging-market corridors. See Stablecoin Payments 101.
- The networks are converging: card networks settle in stablecoins, banks put deposit tokens on public chains, and platforms such as Partior test atomic settlement across both. Expect to support both behind one reconciliation layer.
Sources
ECB: dual-track DLT settlement plan (Pontes, Appia), 1 July 2025 · BIS: Project Agorá findings, 27 May 2026 · UK Finance: GBTD live pilot · CoinDesk: US banks' shared tokenised-deposit network, 5 June 2026 · Latham & Watkins: OCC GENIUS Act proposal · Fnality: sterling payment operations
Next steps
Related articles
Common questions
What is the difference between a tokenised deposit and a stablecoin?
A tokenised deposit is an ordinary bank deposit recorded on a ledger: a liability of a regulated bank, covered by bank regulation and deposit insurance, held by the bank's KYC'd clients and able to pay interest. A payment stablecoin is a claim on a licensed issuer backed 1:1 by a segregated reserve; the GENIUS Act excludes tokenised deposits from its definition of a payment stablecoin.
How do tokenised deposits move between two banks?
Each bank can only issue its own tokens, so the payer bank burns its tokens, pays the payee bank in settlement money (central bank reserves or a correspondent balance) and the payee bank mints its own tokens to the beneficiary. On a shared platform with tokenised central bank money the three steps can run as one atomic transaction.
What are ECB Pontes and Appia?
The Eurosystem's two tracks for settling DLT transactions in central bank money. Pontes links DLT platforms with TARGET Services and launched in September 2026; Appia is the long-term plan for an integrated tokenised European financial ecosystem, with a blueprint expected in 2028.