- VersaBank disclosed that it has already successfully concluded the pilot of its deposit tokens issued on Ethereum, Stellar, and Algorand.
- The institution’s RBTDs are interest-bearing and awaiting regulatory confirmation for federal deposit insurance.
Publicly traded VersaBank (VBNK) revealed that it has completed testing its Real Bank Tokenized Deposits (RBTDs). Ethereum (ETH), Algorand (ALGO), and Stellar (XLM) underpinned the internal pilot of the fully digital financial institution’s new real-world asset (RWA) tokens.
VersaBank Completes Experiment on RBTDs
According to VersaBank’s latest regulatory filing at the US Securities and Exchange Commission (SEC), it’s the first bank to have successfully completed a pilot program with blockchain-based RBTDs. The instruments represent ownership of federally regulated bank deposits, which are tokenized on the Ethereum, Algorand, and Stellar networks.
VersaBank highlighted that RBTDs offer a trusted alternative for mainstream financial applications. Additionally, holders can convert their tokens into other digital currencies, such as Bitcoin (BTC).
The institution stated that the project is part of its goal of positioning itself as a leader in digital asset innovation. Meanwhile, the experiment’s completion came only months after the bank greenlit its pilot in August last year.
The deposit token pilot included tests for the US-dollar-denominated USDVBs and Canadian-dollar-denominated CADVBs.
Tokenized Deposits Better Than Stablecoins
VersaBank touted RBTDs as better than non-bank-issued stablecoins. It claimed that deposit tokens “provide superior security, stability, and regulatory compliance.”
What’s more, the financial institution emphasized that RBTDs are legally able to pay interest. The feature is basically something that non-bank-issued stablecoins are barred from offering in the US and many key markets. Subject to regulatory confirmation, the company also aims to make these financial instruments eligible for conventional federal deposit insurance.
VersaBank complements its RBTDs with its proprietary VersaVault technology. The platform provides custody solutions for the deposit tokens and other digital assets of the bank’s clients.
The Tokenized Deposit Market
VersaBank’s RBTDs leverage the deep liquidity of Etherem, Stellar, and Algorand, with a combined market cap of over $291 billion as of Tuesday. It joins the continuously growing RWA market, which has already ballooned to a $687.25 billion valuation.
The American Bankers Association (ABA) believes deposit tokens pose a strong competition against stablecoins. After all, they benefit from the efficiency of blockchain technology while maintaining the protections of the regulated banking system.
Although numerical forecasts of tokenized deposits are scarce, it’s poised to take a significant chunk of the $313.46 billion global stablecoin value, especially if regulators continue to bar stablecoins from offering yields to holders in key markets like the US.
