Banks Introduce Hybrid Token to Challenge Stablecoin Supremacy

Custodia Bank and Vantage Bank Texas have introduced a blockchain-based platform that enables conventional banks to issue both tokenized deposits and stablecoins, placing themselves at the cutting edge of the changing financial sector. This patented system, which incorporates tokenized deposits and stablecoins compliant with the GENIUS Act into current online banking systems, lets banks retain oversight of digital wallets while benefiting from the security and efficiency of blockchain technology, according to a

. This development connects traditional banking with the crypto world by utilizing a unified token that serves as both a deposit and a stablecoin, addressing issues related to regulatory requirements and the risk of banks being bypassed, as detailed in a .

The platform builds on Custodia’s achievement in July 2025 as the first American bank to launch tokenized deposits on a public blockchain, aiming to challenge the increasing influence of private stablecoin providers. With the stablecoin sector expected to grow from $300 billion to $2 trillion by 2028, according to U.S. Treasury projections, the Coinotag article highlights the urgency for banks to embrace digital innovation to safeguard deposits and stay competitive in a digital economy. The GENIUS Act, enacted in July, has accelerated this transition by establishing clear regulations for tokenized assets, ensuring adherence to banking laws while promoting technological progress, as reported in a

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The platform’s technology merges Custodia’s blockchain framework with Infinant’s Interlace network, allowing for effortless exchanges between tokenized deposits and stablecoins. A protocol currently under patent review utilizes both on-chain oracles and off-chain mechanisms to adjust tokens’ regulatory status without the need for redemption or modification, according to Decrypt. This adaptability means tokens can act as FDIC-insured deposits within banks and as stablecoins when moved to other banks or wallets, maintaining regulatory protections and enabling instant settlements. Early uses include international payments, supply chain finance, and payroll, showcasing the platform’s broad applicability, as noted in a

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Securing regulatory clearance is still essential. Although pilot programs have concluded, Custodia CEO Caitlin Long stated that the platform is still awaiting final approval to expand, as previously reported by Decrypt. This reflects a wider industry movement, with more regional banks looking to adopt blockchain to boost efficiency and improve customer services. For instance, SouthState Bank Corporation recently upheld a $0.60-per-share dividend following strong third-quarter 2025 results, demonstrating confidence in its competitive strategy, according to a

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This launch highlights a significant transformation in banking, where institutions are turning to technology to manage regulatory hurdles and the threat of being bypassed. By providing a ready-to-use solution for tokenized deposits, Custodia and Vantage seek to enable banks of all sizes to join the digital asset space without needing to overhaul their current systems, as mentioned in a

. As more banks adopt this approach, the platform could help establish a parallel payment network within the traditional banking system, allowing smaller banks to compete with larger ones in terms of efficiency and programmability, a trend also highlighted by Decrypt.