European Banks Pilot Tokenized Deposits for 2026 Settlement
Major European banks are accelerating efforts to bring commercial bank money onto blockchain infrastructure through tokenized deposits, according to a report from RWA.io. The initiative involves leading institutions like Citi, BNY, JPMorgan, and Standard Chartered, which see the technology as a regulated path to modernize payments. Tokenized deposits function as digital representations of traditional bank deposits, remaining direct liabilities of the issuing bank and falling under existing frameworks like deposit insurance and AML/KYC rules. This structure positions them as a key component in a future "multi-money" system, complementing stablecoins and central bank digital currencies.
Early projects are already underway. In January, Lloyds Banking Group and Archax completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network. Concurrently, UK Finance is running its Great British Tokenised Deposit pilot through mid-2026 to test various use cases. Supporting these commercial efforts, the European Central Bank (ECB) has unveiled Appia, a long-term plan for tokenized markets. A critical component, the Pontes settlement mechanism, is scheduled to launch in Q3 2026, designed to connect blockchain platforms directly with the Eurosystem’s existing payment infrastructure.
US Regional Banks Counter with Cari Network on ZKsync
The trend is not confined to Europe. A coalition of U.S. regional banks, including Huntington Bancshares, KeyCorp, and M&T Bank, is developing the Cari Network, a tokenized deposit platform built on a private version of the ZKsync network. With a target rollout in 2026, the project aims to enable instant, 24/7 settlement between institutions while keeping funds within the regulated banking system and under FDIC insurance. The platform runs on "Prividium," a permissioned blockchain developed by Matter Labs, ensuring both privacy and regulatory oversight.
This move highlights a strategic push by mid-size banks to compete with crypto-native payment systems without losing deposits to non-bank alternatives. The initiative is backed by the Mid-Size Bank Coalition of America, signaling broad interest in upgrading payment infrastructure from within the traditional financial sector.
Banks should be leading the next phase of digital money, not reacting to it.
— Gene Ludwig, CEO, Cari.
Central Banks Advance Digital Money Infrastructure
These commercial bank initiatives are unfolding as central banks build their own digital currency rails. The European Central Bank is actively progressing its work on a digital euro, recently opening applications for experts to help integrate the currency with existing ATM and payment terminal infrastructure. While a final decision on issuance is pending, the ECB aims to begin a 12-month pilot for the digital euro in the second half of 2027.
The parallel development of bank-led tokenized deposits and central bank digital currencies points toward the emergence of a two-tier monetary system on-chain. By bringing regulated commercial and central bank money into a programmable environment, financial institutions aim to underpin the next generation of digital finance, improving efficiency in everything from cross-border payments to asset settlement.
