Custodia, Vantage propose token that toggles between bank deposits and stablecoins

The proposed system aims to connect traditional banking infrastructure with blockchain-based payment networks with banks retaining customer deposits.

Custodia and Vantage Bank have proposed a token that automatically switches between a bank deposit and a stablecoin as it moves between participating banks and external users.

According to a white paper shared with Cointelegraph on Thursday, the token would operate as a deposit issued by a participating bank when held within a banking consortium and as a stablecoin backed by cash and short-term Treasurys when transferred outside the so-called Hazel network.

The companies said the system has been running on Ethereum (ETH) since March and is being tested by participating banks ahead of a broader rollout planned for later this year. The platform is designed to support tokenized deposits, stablecoins and other blockchain-based financial assets through a shared banking infrastructure.

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