（Original Video in Japanese was published on the FINOLAB CHANNEL on July 28, 2026 by Makoto Shibata）　https://youtu.be/X1FhA6SiuiM

As financial services increasingly move “on-chain,” tokenized deposits are emerging as an important new form of digital money. They aim to combine the trust and stability of conventional bank deposits with the speed, programmability, and flexibility offered by blockchain and distributed ledger technology (DLT). Financial institutions in Japan and overseas are therefore exploring tokenized deposits as part of the next generation of payment and settlement infrastructure.

A tokenized deposit is essentially a digital representation of an existing commercial bank deposit issued on a blockchain or DLT network. It maintains a one-to-one relationship with conventional fiat-denominated deposits, such as yen or U.S. dollar deposits. Because commercial banks remain the issuers, tokenized deposits can operate within existing banking regulations and deposit frameworks while enabling funds to be transferred and settled digitally around the clock.

Tokenized deposits occupy a distinctive position among emerging forms of digital money. Stablecoins are generally issued by private companies and backed by reserve assets, while central bank digital currencies (CBDCs) are direct liabilities of central banks. Tokenized deposits, in contrast, remain liabilities of commercial banks and are legally treated as deposits. In Japan, this means that tokenized deposits fall primarily within the banking regulatory framework, whereas stablecoins are treated as payment instruments under the Payment Services Act. All three forms of digital money can potentially incorporate programmable functions, but their issuers, underlying assets, legal status, and risk structures differ significantly.

One of the most promising applications is Delivery versus Payment (DVP) for securities transactions. Conventional securities settlement involves separate processes for transferring securities and funds, creating time lags and counterparty risk. Although settlement cycles have been shortened internationally—for example, the U.S. securities market moved from T+2 to T+1 in May 2024—the basic challenge remains. By linking tokenized securities and tokenized deposits through smart contracts, the transfer of an asset and its payment could occur simultaneously, enabling atomic settlement. This could eventually facilitate T+0 settlement, reduce counterparty and settlement risks, lower collateral requirements, improve capital efficiency, and enhance market liquidity.

Another major benefit is 24/7 real-time settlement. Conventional interbank payments are still affected by banking hours and business days, while cross-border transactions often involve multiple correspondent banks and may take several business days. Tokenized deposits can be transferred continuously on blockchain networks, potentially enabling immediate settlement at night, on weekends, and on holidays. Such capabilities are becoming increasingly relevant as securities markets themselves consider longer trading hours and financial markets move toward continuous operation.

Tokenized deposits also introduce programmability through smart contracts. In conventional banking, contractual information and payment processing are usually handled through separate systems, requiring manual procedures such as invoice processing, credit checks, payment instructions, and approvals. With tokenized deposits, payment can be automatically triggered when predetermined contractual conditions are satisfied. For example, a payment could be executed immediately when a logistics system confirms that goods have been delivered. In corporate transactions and supply-chain finance, this could improve transparency, reduce administrative workloads, accelerate receivables collection, and make cash-flow management more predictable.

Another advantage is their compatibility with the existing regulatory framework. Because tokenized deposits are issued by regulated banks, they can be designed around established KYC and AML requirements. This may make them easier to integrate into existing banking services than entirely new forms of digital money. At the same time, interoperability will become increasingly important as different banks issue their own tokens. Common protocols and cross-chain technologies will be needed to enable settlement between different tokenized deposits and other tokenized financial assets.

Tokenized deposits could also provide a bridge between traditional banking and Web3 and decentralized finance (DeFi). Stablecoins such as USDT and USDC currently play an important role in DeFi, but concerns have been raised regarding issuer reliability, reserve transparency, and KYC/AML arrangements. Bank-issued tokenized deposits could offer a more regulated form of digital money for permissioned DeFi, where access is restricted to verified participants. This could create new opportunities for institutional lending, collateral management, corporate finance, and B2B payments.

Several initiatives demonstrate how the concept is already moving toward practical implementation. JPM Coin, operated on J.P. Morgan’s Kinexys blockchain platform, is backed one-to-one by bank deposits and is used mainly for large-value corporate payments and liquidity transfers. The platform has processed trillions of dollars in transactions, and experiments are also connecting it with tokenized securities and public blockchain infrastructure.

At the international level, Project Agorá, led by the Bank for International Settlements (BIS) and the Institute of International Finance (IIF), is exploring a next-generation cross-border payment infrastructure based on tokenization. The project brings together seven central banks and more than 40 private financial institutions and examines how tokenized commercial bank deposits and central bank reserves could be integrated using DLT. Its objective is to address longstanding problems in cross-border payments, including slow processing, high costs, and limited transparency.

Japan is also seeing practical initiatives. Hokkoku Bank’s Tochika represents an example of a bank-backed digital currency designed for payments and transactions within Ishikawa Prefecture, with the broader objective of supporting the circulation of funds within the regional economy. Meanwhile, Japan Post Bank is developing a DCJPY-based tokenized deposit and aims to provide settlement services linked to NFTs and security tokens during fiscal 2026.

Overall, tokenized deposits could become an important bridge between the conventional banking system and the emerging on-chain financial economy. They preserve the trust associated with commercial bank deposits while introducing capabilities such as DVP, real-time settlement, smart contracts, and connectivity with digital assets. The key challenge, however, will be integrating this new infrastructure with existing deposit and core banking systems. Ultimately, the pace of adoption may depend not only on blockchain technology itself, but also on how quickly and flexibly banks can transform their existing operational infrastructure.