Custodia and Vantage propose dual-mode token

• Custodia and Vantage Bank proposed a token that switches between a bank deposit and a stablecoin depending on where it is held.
• The system has been operating on Ethereum since March and is currently being tested by participating banks.
• The companies expect the Hazel network to become available to banks and customers in the fourth quarter of 2026.

Custodia and Vantage Bank proposed a token that functions as a bank deposit within participating institutions and as a stablecoin when transferred outside their Hazel banking network.

The proposal comes as banks seek blockchain-based payment solutions while attempting to retain customer deposits that might otherwise move to stablecoin issuers.

“The platform is designed to allow institutions to participate in tokenised payments without moving customer deposits outside the banking system,” said Custodia and Vantage Bank in their white paper.

Under the proposal, the token would operate on Ethereum (CRYPTO:ETH), be backed by cash and short-term US Treasurys when functioning as a stablecoin, and work alongside existing banking systems without requiring institutions to replace core infrastructure.

The companies stated the Hazel network has been running since March, is currently being tested by participating banks, and is expected to become broadly available in the fourth quarter of 2026.

The initiative follows growing interest from traditional financial institutions in tokenised deposits, including reported plans by The Clearing House to launch a blockchain-based deposit network in the first half of 2027.

The proposal also arrives as banks continue debating stablecoin regulation and competition for deposits, while data from DefiLlama shows the stablecoin market has grown to about US$315 billion from roughly US$251 billion a year earlier.

At the time of reporting, Ethereum price was $1,709.34.