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Custodia Bank and Vantage Bank Texas have converted their pilot initiative into a live, nationwide network for U.S. banks. The new platform enables participating institutions to issue blockchain-based tokens that represent insured deposits. This allows banks to transfer traditional money onto blockchain systems while maintaining all protections and complying with U.S. regulations.
Analysts describe this development as a breakthrough for real-world transactions within the banking system. They note that the network aligns with the GENIUS Act, a law permitting certain bank-issued stablecoins to function as deposit instruments rather than securities. This compliance ensures that tokenized deposits remain secure and fully regulated across jurisdictions.
The platform’s tokens resemble digital dollars whose properties vary by location. Within participating banks, deposits are treated as fully insured under FDIC protection. When moved to other institutions or wallets, they retain their stablecoin-like properties, maintaining liquidity and usability.
Custodia Bank founder and CEO Caitlin Long explained that the system uses a patent-pending protocol combining on-chain oracles with off-chain controls. This approach ensures regulatory clarity while maintaining transaction speed.
During an interview, Long said that Custodia’s collaboration uses Infinant’s APIs and ledger infrastructure to handle conversions between digital and traditional forms. “The same token, created through the same smart contract, can change who is responsible for it and its regulatory status,” Long stated.
Custodia Bank, based in Wyoming, was created to bridge digital assets with the U.S. dollar payments system. It adheres to all federal banking regulations, including anti-money laundering, know-your-customer, and Bank Secrecy Act requirements. The institution operates under Wyoming’s special-purpose depository framework, ensuring fiat deposits are 100% reserved.
These strict requirements provide strong investor protection and institutional custody standards. Custodia’s full compliance enables the new tokenized system to function safely within the U.S. banking ecosystem. This structure could redefine how financial institutions transfer insured dollars using blockchain technology.
Unlike the earlier proof-of-concept that tested Vantage’s Avit token on Ethereum, the updated version is built for real-world deployment. It enables faster settlement and interoperability between regulated banks while preserving transparency for regulators.
The platform operates on a permissionless network and has already completed test transactions on Ethereum. Work is also underway to expand functionality to the Bitcoin network.
Dan Dadybayo, research and strategy lead at Unstoppable Wallet, said the development introduces “a compliant settlement layer that moves insured dollars at the speed of blockchain.” He added that this structure maintains “the same safety net, on new rails.”
Furthermore, Dadybayo explained that federal regulators can still monitor fund movements through participating banks. Yet, smaller institutions can now compete more effectively through enhanced efficiency and programmability.
If adoption increases, could this become the next generation of the U.S. payment system built within existing frameworks rather than outside them?
Custodia Bank and Vantage Bank Texas have launched a compliant blockchain network that turns insured deposits into tokenized assets. This platform merges traditional banking security with blockchain efficiency, marking a significant step toward regulated digital finance in the United States.
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