[DigitalToday reporter Chi-gyu Hwang (황치규)] Custodia and Vantage Bank proposed a token structure that remains a deposit inside a bank but converts into a stablecoin when transferred to outside users.

According to a recent Cointelegraph report, the structure focuses on keeping customer deposits within the banking system while linking traditional bank infrastructure with a blockchain-based payments network.

According to a white paper released by the two companies, the token functions as deposits issued by participating banks within a consortium of participating banks. When transferred outside the Hazel network, it converts into a stablecoin backed by cash and short-term U.S. Treasuries.

The platform is designed to support tokenised deposits, stablecoins and other blockchain-based financial assets on shared banking infrastructure. Participating institutions can run it in parallel while keeping existing ledgers and payments infrastructure, without needing to replace their current core banking systems.

The system has been operating on an Ethereum base since March. Wyoming-based Custodia and Texas-based Vantage Bank expected the Hazel network to be broadly available to banks and customers in the fourth quarter of 2026.