Custodia, Vantage propose token that toggles between bank deposits and stablecoins
Custodia and Vantage Bank have proposed a hybrid token that acts as a bank deposit inside a participating banking network and converts into a cash- and Treasury-backed stablecoin when sent outside it. The system, called Hazel, has been running on Ethereum since March and is being tested by banks ahead of a broader rollout later this year. It is designed to let banks and credit unions offer tokenized payments and other blockchain-based financial services without replacing existing core banking systems or moving customer deposits out of the banking system. The companies say Hazel should eventually support tokenized deposits, stablecoins, and other blockchain-based assets, with broader availability to banks and customers expected in Q4 2026. The proposal reflects a wider banking push to adopt blockchain payments while limiting deposit flight to stablecoin issuers, alongside competing efforts such as The Clearing House’s planned tokenized deposit network.
