Recent developments around deposit tokens have reignited market discussion, not because of a single bank’s innovation, but because they spotlight a long overlooked truth: as assets move on-chain and become tokenised, it’s not just the “asset leg” that matters. The system’s ability to scale depends fundamentally on whether the “cash leg” can be structured in the same programmable, interoperable way.
Now, the pieces are falling into place:
- Banks are starting to issue deposit tokens as on-chain settlement instruments for enterprise payments and liquidity movements.
- Cross-bank interoperability is becoming a focal point, aiming to transform deposit tokens from siloed internal tools into mutually exchangeable and interoperable instruments.
- Regulators are also actively shaping frameworks, most notably the HKMA’s EnsembleTX pilot, which explores using tokenised deposits for real-value settlement, and outlines a potential path from RTGS systems to 24/7 programmable central bank money.
From J.P. Morgan’s JPM Coin to DBS and Kinexys’ cross-bank interoperability initiatives, the market is no longer just experimenting, it’s building toward an ecosystem where deposit tokens become the foundational language of tokenised finance.
1. Deposit Tokens Are Not Just Faster Transfers – They’re a New Way to Organize Cash
In traditional systems, a deposit is a ledger entry and a transfer is simply a balance update. Mature infrastructures like China’s IBPS, UK’s FPS, or FedNow in the US already achieve near-instant transfers without needing DLT. But speed isn’t the only issue. The real friction in capital markets lies in synchronous settlement, whether cash and assets can be delivered at the same moment, across entities, time zones, and currencies. Deposit tokens matter because they make bank money orchestratable, composable, and constrained within programmable workflows, ideal for integrating with tokenised asset systems and reducing failure rates and reconciliation costs.
So instead of viewing deposit tokens as “bank-issued stablecoins,” think of them as programmable cash, banks exposing their liabilities to clients in a new, interoperable way.
2. How Deposit Tokens Could Reshape Financial Infrastructure
If the past decade of financial infrastructure upgrades has focused primarily on the speed and reach of payments, then the combination of deposit tokens and asset tokenisation is beginning to address something different: the structural efficiency of capital markets and corporate liquidity management.
First, deposit tokens bring the cash leg closer to a genuinely 24/7 operating model. HSBC’s launch of its Tokenised Deposit Service in Hong Kong places emphasis on corporate cash management and always-on payments, while Standard Chartered’s collaboration with Ant International on the Whale platform extends multi-currency liquidity movements and settlement workflows into a 24/7 organisational framework. This is not about making funds arrive marginally faster; rather, it enables corporate liquidity to operate continuously, across nights, weekends, and time zones, under a consistent set of rules.
Second, a deeper transformation lies in the settlement mechanism itself. Traditional systems are certainly capable of achieving settlement, but they typically rely on coordination across multiple layers. Trading, custody, clearing, and payment systems each maintain their own ledgers, requiring reconciliation and exception handling. Where deposit tokens and asset tokenisation can, within regulatory constraints, support settlement structures closer to DvP or PvP atomicity, payment and delivery can be bound into a single, indivisible action. This reduces failed transactions and inefficient use of capital. HKMA’s EnsembleTX places particular emphasis on settlement of real-value transactions precisely because it targets this structural layer of the market.
Third, cross-bank interoperability ultimately determines whether deposit tokens remain tools or evolve into infrastructure. The significance of the interoperability framework explored by DBS and Kinexys does not lie in the presentation of any specific technical module, but in what it points toward. Only when deposit tokens issued by different banks can be exchanged and settled with one another, within defined regulatory boundaries, can the cash leg truly become a shared language for tokenised asset markets.
3. What Changes for End-Users and Institutions?
For institutional users and investors, the most tangible shift is the compression of workflows.
Today, cross-platform reallocations often require multiple steps: sell, wait for funds, transfer, buy. In a tokenised environment where cash and asset legs are orchestrated together, this becomes a single atomic action, sell and buy in one move, with simultaneous cash and asset delivery.
This isn’t just about speed, it’s about certainty, reduced buffer capital, lower error rates, and less manual intervention.
4. Five Real-World Scenarios That Will Improve
Here are five practical examples where deposit tokens could significantly enhance investor and institutional operations:
- Night & Weekend Reallocations: If tokenised yield-bearing assets (e.g. money market or government bond tokens) become transferable and liquid, investors could adjust portfolios outside of standard windows, bypassing slow redemption and clearing processes.
- Margin & Collateral Replenishment: In repo, derivatives, or leverage structures, the challenge is rarely yield—it’s timely margining. With deposit tokens integrated into tokenised collateral workflows, real-time margin top-ups and releases become possible, reducing liquidation risk.
- Cross-Currency Settlement Certainty: In FX transactions, phased settlement increases mismatch risk. Near-instant PvP across currencies, using deposit tokens, could drastically cut time and counterparty risks.
- Post-Trade Instant Financing: Institutions often buy low-risk assets and immediately refinance them. Tokenisation can orchestrate buy → pledge → finance → redeploy into a seamless workflow, enhancing capital efficiency.
- Multi-Entity Treasury Management: Services like Citi Token Services for Cash and SCB’s Whale platform support 24/7 liquidity across geographies. For corporates and family offices, the value lies not in faster transfers, but in shifting treasury from manual processes to rule-based automation.
5. Recent Deposit Token Projects (Launched / Piloted / PoC)
- J.P. Morgan — JPM Coin / Kinexys Digital Payments
- DBS — Token Services incl. Treasury Tokens
- DBS × Kinexys — Cross-bank Interoperability Framework
- Citi — Citi Token Services for Cash
- HSBC Hong Kong — Tokenised Deposit Service (TDS)
- Standard Chartered × Ant International — Whale Platform (24/7 Liquidity)
- HKMA — Project Ensemble / EnsembleTX
- Swiss Bankers Association — CHF Deposit Token PoC (PostFinance, Sygnum, UBS)
- Axis Bank × J.P. Morgan — Kinexys-based USD 24/7 Payments
Further Reading 1:
Toward a New Paradigm for Institutional Liquidity Products
The future of deposit tokens may not lie in payments alone, but in the fusion of cash management and short-duration yield assets.
Examples like JPMAM’s MONY, BlackRock’s BUIDL, and Franklin Templeton’s tokenised MMFs show how idle cash can evolve into yield-bearing, settlement-ready instruments, blurring the lines between liquidity and investment.
In this paradigm, yield tokens handle return, while deposit tokens handle settlement. Systems could automatically redeem part of a yield token for deposit tokens to meet margin or payment needs, and sweep idle cash back into yield positions when not in use, shifting treasury operations from “daily tasks” to “event-driven automation.”
This doesn’t replace traditional finance. It enhances it, offering new cash-asset structures within existing regulatory frameworks. The success of this model will hinge on interoperability, liquidity, and regulatory clarity, but it’s likely to be one of the most consequential directions in institutional finance over the next decade.
Further Reading 2:
Global 24/7 Instant Payment Systems (Non-DLT)
To avoid conflating DLT with 24/7 settlement, here’s a comparison of leading traditional real-time payment networks:
- Mainland China — IBPS
- UK — Faster Payments (FPS)
- Eurozone — SEPA Instant (SCT Inst)
- ECB — TIPS
- USA — RTP (TCH), FedNow
- Brazil — Pix
- India — UPI
- Australia — NPP
- Singapore — FAST
- Hong Kong — FPS
- Mexico — SPEI
These systems already deliver near-instant domestic retail payments. The real distinction with tokenisation lies not in speed, but in synchronous delivery of cash and assets, atomic settlement, reduced reconciliation overhead, and 24/7 capital market utility.
In short: traditional systems widened the road. Tokenised systems aim to synchronise goods, funds, and rules on the same programmable production line.
Note: Given the rapid evolution of the RWA landscape, this article reflects our current assessment at the time of writing.