{"id":625830,"date":"2026-07-01T10:15:49","date_gmt":"2026-07-01T10:15:49","guid":{"rendered":"https:\/\/www.crypto-news-flash.com\/?p=1293686"},"modified":"2026-07-01T10:15:49","modified_gmt":"2026-07-01T10:15:49","slug":"banks-move-to-bridge-deposits-and-stablecoins-with-new-token-model","status":"publish","type":"post","link":"https:\/\/e-bitco.in\/index.php\/2026\/07\/01\/banks-move-to-bridge-deposits-and-stablecoins-with-new-token-model\/","title":{"rendered":"Banks Move to Bridge Deposits and Stablecoins With New Token Model"},"content":{"rendered":"<div class=\"eth-editorial-banner\"> <img decoding=\"async\" class=\"eth-editorial-logo\" src=\"https:\/\/crypto-news-flash.com\/wp-content\/uploads\/2025\/11\/cnf2-scaled-1-1-1.png\" alt=\"Crypto News Flash\"> <span class=\"eth-editorial-text\">All news is rigorously fact-checked and reviewed by leading blockchain experts and seasoned industry insiders.<\/span> <\/div>\n<ul>\n<li><strong>Custodia and Vantage Bank introduced the Hazel Network on June 18.<\/strong><\/li>\n<li><strong>A single token can operate as both a bank deposit and a stablecoin.<\/strong><\/li>\n<li><strong>Deposits remain inside the banking system while preserving blockchain functionality.<\/strong><\/li>\n<li><strong>The platform has been testing on Ethereum since March 2026.<\/strong><\/li>\n<li><strong>A broader commercial rollout is expected in the fourth quarter of 2026.<\/strong><\/li>\n<\/ul>\n<p><strong><a href=\"https:\/\/www.prnewswire.com\/news-releases\/vantage-bank-and-custodia-release-white-paper-unveiling-hazel-network-302804851.html#:~:text=Blockchain%20Analytics%3A%20The%20platform%20automates,has%20cleared%20the%20compliance%20alerts.\" target=\"_blank\" rel=\"noopener\">Detailed in a white paper released on June 18<\/a><\/strong>, the Hazel Network introduces a unified digital token that can function either as an FDIC-insured bank deposit or as a fully reserved stablecoin, depending on where it is held and transferred.<\/p>\n<h2>A Single Token With Two Legal Identities<\/h2>\n<p>At the center of the Hazel Network is a token designed to change its legal and operational status automatically.<\/p>\n<p>When held within participating banking institutions, the token functions as a tokenized bank deposit. In this state, the bank remains the obligor and the deposit retains the protections associated with traditional banking infrastructure.<\/p>\n<p>When transferred beyond the consortium network, the same token automatically transitions into a stablecoin backed one-for-one by cash reserves and short-term U.S. Treasury securities, aligning with reserve requirements established under the GENIUS Act framework.<\/p>\n<p>The process occurs programmatically, without requiring users to manually convert assets or move funds between separate products.<\/p>\n<h2>Solving the Stablecoin \u201cDeposit Leakage\u201d Problem<\/h2>\n<p>The Hazel architecture addresses one of the banking industry\u2019s biggest concerns surrounding stablecoin adoption: deposit migration.<\/p>\n<p>Traditional banks have increasingly worried that customers moving funds into stablecoins effectively remove deposits from the banking system, reducing liquidity and limiting lending capacity.<\/p>\n<p>Hazel\u2019s design seeks to eliminate that friction by allowing deposits to remain within the regulated banking ecosystem while simultaneously enabling blockchain-based functionality.<\/p>\n<p>Rather than forcing customers to choose between traditional banking services and digital asset infrastructure, the model combines both within a single programmable instrument.<\/p>\n<p>Industry participants view the framework as a potential blueprint for how banks may compete with private stablecoin issuers while preserving existing funding structures.<\/p>\n<h2>Compliance Embedded Into the Infrastructure<\/h2>\n<p>Unlike many existing stablecoin models, compliance controls are integrated directly into the network architecture.<\/p>\n<p>According to the white paper, blockchain analytics continuously screen wallet activity and transaction destinations before transfers are finalized. Transactions flagged as high-risk can be paused and reviewed by compliance teams before settlement occurs.<\/p>\n<p>The approach reflects increasing regulatory expectations as U.S. policymakers move toward stricter oversight of stablecoin issuers under the GENIUS Act framework.<\/p>\n<p>By embedding compliance directly into transaction infrastructure, Hazel aims to provide banks with a blockchain-based payments system that satisfies both operational efficiency and regulatory requirements.<\/p>\n<h2>Live Testing Already Underway<\/h2>\n<p>The project is no longer theoretical.<\/p>\n<p>Custodia and Vantage disclosed that a reference implementation has been operating on Ethereum mainnet since March 2026 as part of a phased testing process.<\/p>\n<p>The consortium has completed the first of four planned production-scale testing phases, with additional validation rounds scheduled before broader deployment.<\/p>\n<p>Executives involved in the initiative have indicated that the platform remains on track for commercial availability during the fourth quarter of 2026.<\/p>\n<p>For banks evaluating stablecoin strategies, the live testing environment provides one of the earliest real-world examples of a tokenized deposit framework operating alongside public blockchain infrastructure.<\/p>\n<h2>A New Competitive Front in Stablecoin Infrastructure<\/h2>\n<p>The timing coincides with intensifying competition across the stablecoin ecosystem.<\/p>\n<p>Major asset managers including Fidelity, BlackRock and State Street have recently launched reserve-management products targeting stablecoin issuers, while lawmakers continue implementing the first comprehensive federal regulatory framework for dollar-backed digital assets.<\/p>\n<p>Hazel approaches the market from a different angle.<\/p>\n<p>Rather than competing to issue standalone stablecoins, the network seeks to provide banks with the infrastructure needed to offer blockchain-native payment services without surrendering customer deposits to external issuers.<\/p>\n<p>The initiative is already integrated with Infinant\u2019s Interlace banking platform and is being positioned for adoption across a network of hundreds of community and regional financial institutions.<\/p>\n<h2>Banking and Blockchain Continue to Converge<\/h2>\n<p>The launch of Hazel underscores a broader shift taking place across the financial industry.<\/p>\n<p>As stablecoin regulation becomes clearer and institutional adoption accelerates, banks are increasingly moving beyond experimental blockchain projects toward production-ready payment infrastructure.<\/p>\n<p>The significance of Hazel may ultimately extend beyond its technology.<\/p>\n<p>If successful, the model could provide a framework for how regulated financial institutions participate in the digital asset economy while maintaining compliance, preserving deposits and leveraging the efficiency advantages of blockchain-based settlement.<\/p>\n<p>For the banking industry, the question is no longer whether tokenized dollars will become part of mainstream finance. The emerging debate is who will control the infrastructure that powers them.<\/p>\n<p> <a href=\"https:\/\/www.crypto-news-flash.com\/\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>All news is rigorously fact-checked and reviewed by leading blockchain experts and seasoned industry insiders. Custodia and Vantage Bank introduced the Hazel Network on June 18. A single token can operate as both a bank deposit and a stablecoin. Deposits remain inside the banking system while preserving blockchain functionality. The platform has been testing on [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":625831,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[25],"class_list":{"0":"post-625830","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-other","8":"tag-news"},"_links":{"self":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts\/625830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/comments?post=625830"}],"version-history":[{"count":0,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts\/625830\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/media\/625831"}],"wp:attachment":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/media?parent=625830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/categories?post=625830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/tags?post=625830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}