Does a jurisdiction treat a tokenized deposit as an existing bank liability that’s wrapped in new technology, or does it require a new legal category?
Every regulatory regime for bank-issued digital money starts with that question. Because the answer only determines whether a token qualifies for deposit insurance, how it’s treated on the balance sheet, and who is allowed to issue it.
But banks are not waiting for full global convergence. Approximately two-thirds of banks are developing or discussing tokenized deposit solutions for corporate clients, per the American Banker 2026 survey.
At the same time, regulators from Washington, EU, UK, Singapore, Hongkong and other countries have published rules, proposals, and pilot frameworks that differ in structure and scope.
This article maps how major countries treat tokenized deposits, compares their positions on a scorecard for risk and compliance executives, examines their blind spots, and concludes with an implementation roadmap for banking leaders.
How Do Different Countries Regulate Tokenized Deposits?
United States
US has taken a technology-neutral stand for tokenized deposits with a clear boundary for stablecoins. So in the US, a deposit recorded on a distributed ledger is still a deposit, and the ledger does not change its legal character.
Source: federalregister.gov/documents
The Federal Deposit Insurance Act’s definition of “deposit” is technology-neutral, and tokenized forms do not constitute a separate category under FDIC regulation. In April 2026, the FDIC Board approved a proposed rulemaking that would codify this directly, stating that a financial product meeting the statutory definition of a deposit remains a deposit regardless of the technology used to represent or record it, and proposing that tokenized deposits receive the same deposit insurance treatment as conventional deposits.
This is reinforced by the GENIUS Act as well. It has created a separate federal framework for payment stablecoins and excluded tokenized deposits from that category. Stablecoin holders are explicitly barred from earning yield under GENIUS; tokenized deposit holders are not, because the underlying claim is still a bank liability, not a redemption right against a reserve pool.
But there are a few edge cases that still need clarification. For example, clarity on BSA/AML checks specific to tokenized deposit networks, or how pass-through insurance concepts apply when a wallet provider is there between the bank and the end holder.
In practice, US banks are currently using private, permissioned networks. For internal transfers, banks like JPMorgan and Citi use their own private ledgers. For transfers between different banks, a shared platform (like The Clearing House) coordinates the transactions. But the final settlement still runs through the traditional central bank RTGS system.
European Union
The EU took a different legal approach from the US to regulate tokenized deposits. The US has updated its banking rules to fit digital tokens. But the EU has created its new crypto law (MiCA) and explicitly left tokenized bank deposits out of it. Instead, the EU keeps them under traditional banking laws.
“Accordingly, this Regulation expressly excludes from its scope crypto-assets that qualify as financial instruments as defined in Directive 2014/65/EU, those that qualify as deposits as defined in Directive 2014/49/EU of the European Parliament and of the Council (7), including structured deposits as defined in Directive 2014/65/EU…”
Source: eur-lex. europa.eu/legal-content (Article 2, Paragraph 4, Clause (b))
This allows tokenized deposits to skip the heavy regulatory costs and capital rules that MiCA puts on electronic money tokens and asset-referenced tokens like stablecoins.
So how a bank designs the token will determine if it gets deposit insurance or not.
- To get Deposit Status (Protected): The token must be tied directly to a traditional bank account. When a customer moves money to the blockchain, the bank debits their regular bank account and credits their digital token balance. Because it is backed by a real account on the bank’s core system, it counts as a regular deposit and gets deposit insurance.
- To be treated as Crypto/EMT (Not Protected): If the token exists only on the blockchain ledger, with no connection to a traditional bank account, the EU views it as a “bearer instrument” (like physical cash or a stablecoin). The EU classifies this as an Electronic Money Token (EMT). It does not get deposit protection and faces stricter crypto rules.
This is a meaningful design constraint. If your bank wants to offer tokenized deposits that keep their regulatory deposit status and insurance in the EU, you cannot build freestanding crypto tokens. You must architect the system so every blockchain token is anchored to a traditional, off-chain bank account.
To give banks a supervised space to test without waiting for final regulation, the EU created a legal sandbox called the DLT Pilot Regime that lets institutions trial tokenized delivery-versus-payment and settlement rails. This was started in March 2023 and will be valid for 6 years.
Source: EY
United Kingdom
UK banks are operating tokenized deposits under existing banking permissions until a separate framework is finalized. The UK is building the framework live, through the Digital Securities Sandbox (DSS), Great British Tokenized Deposits (GBTD) pilot, and a few other initiatives mentioned below.
In the Digital Securities Sandbox, the central bank’s guidance makes it explicit that tokenized deposits can be used as a payment asset within it, alongside other low-risk, regulated forms of private money, and that this approach aligns with the CPMI-IOSCO Principles for Financial Market Infrastructures. Sixteen firms, including HSBC, Euroclear, and the London Stock Exchange Group, are preparing to launch live tokenized settlement services through this sandbox from late 2026.
Here’s what Sarah Breeden, Deputy Governor for Financial Stability said in her May 2026 speech,
“The sandbox will enable markets in these securities to grow up to a set size over the next five years, during which time the Bank, FCA and HM Treasury intend to learn from firms’ activity and, subject to that, to determine the new, permanent regulatory regime for the trading and settlement of digital securities.”
So, this controlled, five-year window gives financial institutions the operational predictability needed to scale their digital asset testing .
On the commercial banks’ side, the main vehicle is the Great British Tokenized Deposits (GBTD) pilot, coordinated by UK Finance with Barclays, HSBC, Lloyds, NatWest, Nationwide, and Santander. It runs live transactions through mid-2026 across three use cases. These are marketplace payments, remortgaging, and digital asset settlement.
Source: UK Finance
The GBTD pilot connects into the Bank of England’s Digital Securities Sandbox work on cross-ledger settlement.
The UK is also coordinating internationally. Very recently, HM Treasury (UK) and the US Treasury have published the first ten recommendations of the Transatlantic Taskforce for Markets of the Future. The recommendations endorse a multi-money ecosystem in which stablecoins, tokenized deposits, and other forms of digital money coexist and interoperate. They are non-binding, and they indicate the direction both regimes intend to take.
Source: HM Treasury / US Treasury joint publication
Switzerland
Switzerland does not have any separate law for governing tokenized deposits. Hence the 2024 FINMA guidance is used here. Under FINMA’s stablecoin guidance, a fiat-pegged token with a fixed 1:1 redemption claim against the issuer is treated as public deposit under banking law, and accepting public deposits on a professional basis requires a Swiss banking licence.
Because Switzerland uses traditional banking rules, a company that wants to issue a fiat-pegged token has only two choices:
- Option 1 : You get a full Swiss banking license. The tokens you issue are treated as tokenized bank deposits. They are fully regulated under standard banking laws and automatically covered by the Swiss deposit insurance scheme (up to CHF 100,000).
- Option 2: If you are a FinTech and don’t have a banking license, you cannot hold the customer’s cash backing the token on your own beyond a limit. You must take all that cash and deposit it into a licensed Swiss bank. That bank must then issue an irrevocable default guarantee.
If option 2 is taken, the token holders are not protected by the government’s deposit insurance scheme if the fintech goes bankrupt. Instead, the private bank’s default guarantee substitutes for deposit insurance. So the token holders have a direct legal right to go to the Swiss bank that backed the project and make a claim.
Hong Kong
Hong Kong’s approach runs through the Hong Kong Monetary Authority’s Project Ensemble. Its current phase, EnsembleTX, moved from simulated testing into real-value transactions in late 2025 and is running through 2026 with seven commercial banks.
Interbank settlement of tokenized deposit transactions is handled today through the existing Hong Kong Dollar Real Time Gross Settlement system, with a roadmap toward 24/7 settlement in tokenized central bank money once the infrastructure matures.
Both regulators are treating the underlying legal claim as a standard bank liability; the innovation is in the settlement rail, not the legal wrapper.
Hong Kong regulates stablecoins separately. The Stablecoins Ordinance, effective 1 August 2025, established a licensing regime for fiat-referenced stablecoin issuers. Tokenized deposits sit outside that regime, inside the banking perimeter.
Singapore
Singapore separates stablecoins and deposit tokens cleanly. MAS regulates single-currency stablecoins under a dedicated framework. For deposit tokens, a MAS consultation proposed that no additional reserve backing or prudential requirements should be imposed on issuing banks, on the grounds that existing capital, liquidity, AML, and technology risk requirements already protect banks and their customers.
“As to bank SCS issuers, MAS acknowledges the feedback that there are differences in the value-stabilising mechanisms used for fully reserve asset-backed stablecoins and tokenised bank liabilities, and thus the risks they pose to holders. MAS will therefore exclude tokenised bank liabilities from the scope of the SCS framework. However, MAS may impose additional requirements on tokenised bank liabilities in the future as necessary, taking into consideration the design of such tokenised bank liabilities.”
Source: MAS, August 2023 Response Paper
Alongside this, MAS’s BLOOM initiative and the long-running Project Guardian are testing cross-border interoperability for tokenized bank liabilities with more than 40 participating institutions.
The Regulatory and Balance Sheet Scorecard for Tokenized Deposits
| Jurisdiction | Legal status of the token | Holder protection | Prudential treatment | Pilot or framework route |
| US | Deposit; technology-neutral, distinct from GENIUS Act stablecoins | FDIC insurance; proposal pending to clarify tokenized arrangements | Existing bank capital and liquidity rules | Private permissioned networks; TCH shared ledger |
| EU | Deposit; excluded from MiCA | National deposit guarantee schemes | Traditional banking supervision | DLT Pilot Regime |
| UK | Deposit under existing permissions; bespoke rules pending | FSCS deposit protection | Existing bank rules | GBTD pilot; Digital Securities Sandbox |
| Switzerland | Public deposit if par-redeemable; banking licence required | Bank-guarantee model for non-banks; guaranteed holders outside the deposit scheme | Banking Act framework | FINMA guidance-driven |
| Hong Kong | Deposit inside banking perimeter; stablecoins licensed separately | Deposit Protection Scheme | Existing bank rules | Project Ensemble / EnsembleTX pilot |
| Singapore | Deposit; no additional reserve requirements proposed | SDIC deposit insurance | Existing capital, liquidity, AML, tech-risk rules | Project Guardian; wallet-level KYC expectations |
How Banking Executives Should Approach Tokenized Deposit Implementation
Given how fragmented the legal landscape still is, the sequencing of a tokenized deposit program matters as much as the technology choice itself.
1. Start with infrastructure selection.
The first decision is network topology. A private single-bank ledger maximizes control and the most legally safe option. A shared multibank network extends reach globally and lets banks join global or existing consortiums.
Within permissioned architectures, the choices can be from permissioned EVM chains, ZK chains, and Hyperledger Besu deployments to custom L1s. The choice of tokenization engine is also vital as it should match requirements for mint, transfer, and burn lifecycle control, messaging standards, identity integration, and auditability.
Whatever the choice, banks should plan for deep integration with core banking, cash management, and treasury systems, since that integration is what enables large-scale corporate adoption.
2. Choose the first use case for demonstrable value.
Liquidity orchestration is the strongest opening move for most institutions. Smart-contract-driven treasury services offer immediate, measurable value to multinational enterprise clients.
Adoption today is already concentrated in corporate treasury, selected cross-border payments, and intraday financing workflows within single-bank or tightly governed environments.
3. Where a sandbox exists, use it.
The EU DLT Pilot Regime, the UK Digital Securities Sandbox, Hong Kong’s EnsembleTX, and the ADGM framework each provide supervised environments that reduce regulatory ambiguity during testing.
Building inside these structures also creates a documented engagement record with supervisors, which is useful when bespoke rules arrive.
4. Design privacy and compliance from day one.
Banks should design entire system-wide privacy instead of just network level privacy in their blockchain stack used for tokenized deposits. It can’t be limited to only participator level access control that default enterprise blockchain networks provide. Selective disclosure, custom ZK-workflow, role-based access control, confidential token transfer, and more such components are necessary in a bank-grade blockchain.
And they need to be designed from day1 to stay compliant.
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Zeeve has helped a big US bank with their tokenization initiative. Talk to us to discuss yours.
