Custodia, Vantage Propose Token That Switches Between Bank Deposits and Stablecoins

Custodia Bank and Vantage Bank have proposed a dual-mode token designed to bridge bank deposits and payments on public blockchains. The token is treated as a bank deposit while it remains within the participating banks' Hazel network, but becomes a stablecoin when transferred outside the network. This would allow regulated funds to move between the traditional banking system and onchain environments.

The two banks said the system has been tested on Ethereum since March. When the token leaves the Hazel network, it automatically converts into a stablecoin backed by cash and short-term US Treasuries, then reverts to a deposit upon returning to a participating bank. The issuance amount, formal launch date and list of participating banks have not yet been announced.