Blockchain in banking: from payments to custody

Two banks that process a transfer each keep their own ledger of it, and staff fix mismatches by hand; a cross-border wire can take days to settle. Chainlink's overview for banks describes a shared ledger as the fix: both sides read the same record. One product built on that idea is the tokenized deposit, a bank deposit recorded on a ledger that stays a claim on the bank.

J.P. Morgan's Kinexys runs JPMD, a USD deposit token for institutional clients. In Germany, Deutsche Bank, Commerzbank, DZ Bank, UniCredit and Helaba piloted a shared Commercial Bank Money Token with industrial clients, and on November 7, 2024 Deutsche Bank and UBS settled fictitious corporate payments with tokenized deposits over the Bundesbank's Trigger Solution. The page on tokenized deposits covers both.

A tokenized bond moves in seconds, but the payment for it still has to reach a settlement point. The Eurosystem's exploratory work tested this from May to November 2024 with 64 market participants and more than 50 trials, some with real central bank money. Pontes, the follow-up, links DLT platforms to the TARGET Services so that euro wholesale transactions settle against central bank money; Appia is the long-term track.

DZ BANK is among the first participants of Pontes, according to the ECB. Swift and Chainlink connect banks to several blockchains through existing Swift messaging. The page on wholesale CBDC compares the settlement designs.

On the asset side, German banks issue bonds as crypto securities under the Electronic Securities Act. DZ BANK and KfW ran the full lifecycle of a crypto security on a public blockchain, from creation to payment. Trading venues for tokenized securities work under the DLT Pilot Regime, where 21X and 360X hold German permissions.

Crypto custody is the third use. Commerzbank and DekaBank hold crypto custody licenses, and cooperative banks reach crypto through DZ BANK's platform. Some banks run permissioned ledgers among known participants, described on the page on enterprise blockchain; others use public chains for issuance.

Deutsche Bundesbank, Deutsche Bank, Commerzbank, DZ Bank and AllUnity discussed payments in DLT-based markets at the Frankfurt Forum on Digital Assets & Applications, announced on Finance Loop's blog. At Capital & Code in Frankfurt, where Finance Loop is a media partner, central bankers, banks and corporate treasurers discuss stablecoins, tokenized funds and faster settlement.

For tokenized deposits and payments between banks, for settling tokenized securities against central bank money, for issuing bonds as crypto securities, and for holding crypto assets for clients.

Yes. Deutsche Bank, Commerzbank, DZ Bank, UniCredit and Helaba piloted a Commercial Bank Money Token, DZ BANK and KfW issued a crypto security on a public blockchain, and Commerzbank and DekaBank hold crypto custody licenses.

Both. J.P. Morgan moved its deposit token from its own private ledger to the public network Base, DZ BANK and KfW used a public chain, and networks such as Canton link the private ledgers of banks.