Custodia and Vantage propose dual-purpose token that toggles between bank deposits and stablecoins

Think of it like a light switch for money. One position: your dollars sit as a traditional, FDIC-insured bank deposit. Flip it: those same dollars become a stablecoin that can move across public blockchain rails. Custodia Bank and Vantage Bank are building exactly that, and they want hundreds of smaller US banks to use it.

The system, operating under what the two banks call the Hazel Network, uses a single ERC-20 token on Ethereum’s mainnet that can function as either a tokenized bank deposit or a compliant stablecoin, depending on context. When the token stays within the member bank network, it behaves like a deposit sitting on the issuing bank’s balance sheet. When it leaves that network, it toggles into stablecoin mode for broader blockchain-based transactions.

How the plumbing actually works

The technical backbone comes from Infinant’s Interlace platform, which handles the programmable logic that determines how the token behaves in different environments. In English: the software decides whether your token acts like a bank deposit or a stablecoin based on where it’s being used.

The key selling point for banks is that customer deposits never leave their balance sheets. Traditional stablecoins like USDC or USDT require reserves to be held by the issuer, effectively pulling deposits away from banks. Custodia and Vantage’s model lets member banks keep those deposits, and the FDIC insurance that comes with them, while still giving customers access to blockchain payment rails.

The pilot phase is already underway. In March 2025, Custodia and Vantage completed what they describe as the first US bank-issued tokenization of dollar demand deposits on a public blockchain. That pilot included real payments for logistics firms, not just a sandbox demo.

On October 23, 2025, the platform was officially announced with an open invitation for banks to join the 2026 rollout. By March 2026, the two banks had secured an agreement with Participate, a network encompassing roughly 600 community and regional banks, to integrate the tokenized deposit system.

Why 600 small banks are paying attention

The practical use cases being pitched include cross-border payments and automated financial triggers, the kind of programmable money features that have long been promised by crypto but rarely delivered through regulated banking channels.

Custodia CEO Caitlin Long and Vantage CEO Jeff Sinnott have been the public faces of the initiative. Both were ranked on American Banker’s “Most Innovative People in Finance” list around the time the Hazel Network white paper was released in June 2026.

The regulatory tailwind

The GENIUS Act, enacted in July 2025, established a federal framework for payment stablecoins that the Hazel Network’s model appears designed to comply with. The legislation created clearer rules around reserve requirements, issuer licensing, and consumer protections for stablecoins.

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