Versabank, a Canadian digital bank focusing on corporate customers, has begun to test a tokenized deposit, as the bank says, provides a safer and more compatible alternative to stableecoins.
The pilot that runs through the bank’s US subsidiary Versabank US will try a US dollar version of the bank’s blockchain-based digital deposit receipts (DDRS) technique. Each token, Branded USDVB, represents a US dollar held at a deposit in Versabank USA.
The program will simulate thousands of small value transactions, first internally and then with selected external partners. Tokens is administered through the bank’s digital vault and e-drawing platforms and issued at Ethereum Algorand and the stars Blockchains.
While stableecoins, Krypto -Tokens with awards tied to Fiat currencies like the US dollar, has caught most of the attention, banks also investigate tokenized deposits to make money transfers more effective using blockchain rails. A stablecoin, which Circle’s USDC or Tether’s USDT is typically issued by a private company and supports the tokens value with reserves held by a third -party custodian. Meanwhile, a tokenized deposit is a responsibility for a regulated bank and subject to banking rules.
Earlier this year, Custodia and Vantage Bank Tokenized Bank the US Dollar demand deposits at Ethereum, while JPMorgan tested its deposit on Coinbase’s Layer-2 network base.
Unlike most stableecoins, Versabank said tokens is federally insured and can serve interest rates, making them functionally similar to traditional deposits, but with the extra efficiency of blockchain-based settlement.
The bank said it expects to end the pilot by the end of 2025 and will seek approval from the Currency Currency Office (OCC) Before any public launch.
Read more: Stableecoins, Tokenization puts pressure on Money Market Funds: Bank of America
