What are tokenized deposits?

Tokenized deposits work like an account balance that the bank books on a distributed ledger. The European Banking Authority (EBA) gives the meaning in its 2024 report, where a tokenized deposit is "a deposit balance recorded on a DLT or similar technology". A bank can run the ledger as its main record or add it as a second layer next to its core banking system, which then needs reconciliation.

In the cases the EBA observed, the claim is bound to the identity of the account holder and cannot pass to someone who is not a client of the bank. A payment to another bank destroys the claim on the sender's bank and creates a new claim on the receiver's bank; the two banks settle, often in central bank money (EBA, December 2024). As the Bank for International Settlements (BIS) explained in 2023, tokenized deposits that "settle in central bank money are more conducive to singleness" of money (BIS Bulletin 73, April 11, 2023).

No, tokenized deposits are regulated as deposits. In its Report on tokenised deposits, the EBA states that recording a deposit claim on a ledger "does not per se alter the fundamental nature of the claim and thus its regulatory qualification as a deposit". MiCA excludes deposits from its scope, so the bank rules of the CRD and the CRR apply, together with the anti-money laundering rules. The EBA saw no immediate need to change the framework.

This is the line between a tokenized deposit and an e-money token issued by a bank. In the EBA table, the tokenized deposit rests on a continuing client relationship, can pay interest and is not transferable on secondary markets. The e-money token circulates like a bearer instrument and pays no interest. The full comparison is on tokenized deposits vs stablecoins.

Yes, tokenized deposits are covered by the ordinary deposit guarantee. The EBA table lists "DGS coverage under the same conditions as traditional deposits". In the EU that is EUR 100,000 per depositor and bank (Article 6(1) of Directive 2014/49/EU), repaid within seven working days (Article 8(1)). An e-money token is not covered: its white paper must warn that it falls outside the deposit guarantee schemes (Article 51(4) of MiCA).

The use cases the EBA found are the settlement of securities and payments for goods on a ledger. Examples of tokenized deposits in Europe are still rare: the live case in the EEA is a bank that runs its own permissioned ledger, where clients pay with tokenized deposits for securities at issuance, delivery versus payment. A second project, by a consortium of five banks and industrial firms, tested payments between clients of different banks with interbank settlement in the real-time gross settlement system, and payments for goods triggered by smart contracts.

The ECB sees the instrument as a candidate for wholesale settlement: tokenized commercial bank deposits "carry the credit quality of regulated institutions" and "may in time prove preferable to stablecoins for many wholesale use cases" (ECB, May 8, 2026).

The risks the EBA names are operational: outages or attacks on the ledger, and dependence on outside providers of the ledger. The effect on how quickly deposits can leave a bank "is yet to be assessed".

In Germany and Austria a tokenized deposit is a bank deposit, and the bank needs a banking license. BaFin supervises banks under section 6 of the Banking Act (KWG), the FMA under section 69 of the Austrian Banking Act (BWG). Statutory protection is EUR 100,000 per depositor in both countries (section 8 of the Einlagensicherungsgesetz; section 7 of the Einlagensicherungs- und Anlegerentschädigungsgesetz). The German Banking Industry Committee published a working paper on a commercial bank money token on April 13, 2023, for delivery versus payment, pay-per-use and automated payments (Deutsche Kreditwirtschaft, April 13, 2023).

The Deutsche Bundesbank in Frankfurt built the Trigger Solution, a bridge between the Eurosystem payment system T2 and DLT platforms. On November 7, 2024, Deutsche Bank and UBS used it to settle fictitious corporate client payments between the two banks on the basis of tokenized deposits (Deutsche Bundesbank, November 29, 2024).

Switzerland is outside the EU. FINMA grants the banking license, and the Swiss deposit guarantee is "limited to CHF 100 000 per client and bank" (esisuisse). On November 7, 2024, UBS reported a pilot of UBS Digital Cash, a blockchain-based payment solution for corporate and institutional clients, with payments in US dollars, Swiss francs, euros and Chinese yuan (UBS, November 7, 2024).

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