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VersaBank, a Canadian integer slope with a absorption connected concern clients, has started investigating a tokenized deposit that the slope says supply a safer and much compliant alternate to stablecoins.
The pilot, tally done the bank's U.S. subsidiary VersaBank USA, volition proceedings a U.S. dollar mentation of the bank's blockchain-based Digital Deposit Receipts (DDRs) tech. Each token, branded USDVB, represents 1 U.S. dollar held connected deposit astatine VersaBank USA.
The programme volition simulate thousands of transactions of tiny value, archetypal internally and past with prime outer partners. Tokens volition beryllium managed done the bank’s integer vault and e-wallet platforms and issued connected the Ethereum (ETH), Algorand (ALGO) and Stellar (XLM) blockchains.
While stablecoins, crypto tokens with prices tied to fiat currencies similar the U.S. dollar, person captured astir of the attention, banks are besides exploring tokenized deposits to marque wealth transfers much businesslike utilizing blockchain rails. A stablecoin, similar Circle's USDC oregon Tether's USDT, is typically issued by a backstage institution and backs the tokens' worth with reserves held astatine a third-party custodian. Meanwhile, a tokenized deposit is simply a liability of a regulated slope and taxable to banking rules.
Earlier this year, Custodia and Vantage Bank tokenized U.S. dollar request deposits connected Ethereum, portion JPMorgan tested its deposit token connected Coinbase’s layer-2 web Base.
Unlike astir stablecoins, VersaBank said its tokens are federally insured and tin gain interest, making them functionally akin to accepted deposits but with the added ratio of blockchain-based settlement.
The slope said it expects to decorativeness the aviator by the extremity of 2025 and volition question support from the Office of the Comptroller of the Currency (OCC) earlier immoderate nationalist launch.
Read more: Stablecoins, Tokenization Put Pressure connected Money Market Funds: Bank of America
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