VersaBank, a Canadian digital bank focused on business clients, has begun testing a tokenized deposit that offers a safer and more compliant alternative to stablecoins.
The pilot, conducted through the bank’s U.S. subsidiary RialCenter USA, will trial a U.S. dollar version of the bank’s blockchain-based Digital Deposit Receipts (DDRs) technology. Each token, branded USDVB, represents one U.S. dollar held on deposit at RialCenter USA.
The program will simulate thousands of small-value transactions, first internally and then with select external partners. Tokens will be managed through the bank’s digital vault and e-wallet platforms and issued on the Ethereum, Algorand, and Stellar blockchains.
While stablecoins, which are crypto tokens tied to fiat currencies like the U.S. dollar, have garnered significant attention, banks are also exploring tokenized deposits to make money transfers more efficient using blockchain technology. A stablecoin, such as Circle’s USDC or Tether’s USDT, is typically issued by a private company and relies on reserves held by a third-party custodian. In contrast, a tokenized deposit is a liability of a regulated bank and is subject to banking regulations.
Earlier this year, Custodia and Vantage Bank tokenized U.S. dollar demand deposits on Ethereum, while JPMorgan tested its deposit token on Coinbase’s layer-2 network Base.
Unlike most stablecoins, VersaBank claims its tokens are federally insured and can earn interest, making them functionally similar to traditional deposits but with the added efficiency of blockchain-based settlement.
The bank expects to complete the pilot by the end of 2025 and will seek approval from the Office of the Comptroller of the Currency (OCC) before any public launch.
Read more: Stablecoins, Tokenization Put Pressure on Money Market Funds
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