Custodia and Vantage Unveil Hazel Token That Changes From Bank Deposit to Stablecoin

Highlights:

• The Hazel token changes from a bank deposit to a stablecoin when users move it outside the Hazel network.
• Custodia and Vantage want community banks and credit unions to offer blockchain payments without losing customer deposits.
• Banks are increasing their focus on tokenized deposits as the stablecoin market continues to grow.

Custodia Bank and Vantage Bank have unveiled the Hazel network, a payment system that allows one digital asset to serve as both a bank deposit and a stablecoin. Wyoming-based Custodia and Texas-based Vantage expect banks and customers to access the network during the fourth quarter of this year.

💳 Custodia and Vantage propose a token that toggles between bank deposits and stablecoins.

Custodia and Vantage have introduced a proposed token system designed to connect traditional banking infrastructure with blockchain-based payment networks. The system would allow banks to…

— Crynet (@crynetio) June 19, 2026

According to the white paper, the token changes its legal and operational status as it moves through the network. When customers hold the token inside the Hazel consortium, participating banks treat it as a bank deposit issued by the institution. However, when customers transfer the token to external users or platforms outside Hazel, the asset becomes a stablecoin.

Custodia and Vantage said cash and short-term U.S. Treasury securities back the stablecoin version of the token. The banks designed the structure to combine regulated bank deposits with blockchain-based payments.

The companies also said Hazel has operated on Ethereum since March as participating banks test the system before launch. The Hazel token uses shared banking infrastructure that allows multiple institutions to issue and manage tokenized assets through a common framework.

Custodia and Vantage said the model differs from traditional stablecoin arrangements because customer deposits remain within participating banks. The banks said the system allows customers to use blockchain-based payments without moving deposits to third-party stablecoin issuers.

Hazel Token Creates New Path for Community Banks in Digital Payments

Custodia and Vantage designed Hazel for community banks, regional lenders, and credit unions that want blockchain payment services. The banks introduced the network as financial institutions search for ways to enter tokenized payments while protecting customer deposits.

According to the white paper, participating institutions do not need to replace existing banking systems. Banks can continue using core banking software, payment rails, and ledger infrastructure after joining the network. As a result, institutions can offer blockchain-based payment services without overhauling existing operations.

Custodia and Vantage said the Hazel token helps banks enter blockchain payments without losing customer deposits to stablecoin issuers. Traditional stablecoin models place reserves with issuing companies, which can draw deposits away from regulated banks. Hazel instead allows banks to keep customer relationships while offering tokenized payment services.

The project builds on earlier work from both institutions. Custodia and Vantage completed what they described as the first U.S. bank tokenization of dollar demand deposits on a permissionless blockchain in March last year. The pilot included the issuance, transfer, and redemption of Avit stablecoins for a bank customer.

Growing Stablecoin Market Fuels Race for Bank-Issued Digital Dollars

Custodia and Vantage unveiled the Hazel token as banks increase their focus on tokenized deposits and blockchain-based payment networks. The Wall Street Journal reported earlier that The Clearing House plans to launch a tokenized deposit network. According to the report, the network would allow banks to settle payments using blockchain-based representations of customer deposits.

The Clearing House, owned by 25 of the largest US banks, is putting deposits on-chain.

Tokenized deposits are just one more rail. The winners will route across all of them. pic.twitter.com/5ZuCeavZbU

— Modern Treasury (@ModernTreasury) June 12, 2026

At the same time, several banking groups are opposing proposals that could allow stablecoin issuers to compete directly for deposits. JPMorgan Chief Executive Officer Jamie Dimon recently said banks would continue challenging provisions in the CLARITY Act. He argued that the legislation could allow crypto companies to compete for deposits without obtaining bank charters. The GENIUS Act, which became law in July last year, introduced federal rules for payment stablecoins in the United States.

Meanwhile, stablecoin adoption continues to grow. DefiLlama data show that the stablecoin market capitalization has risen to roughly $315 billion, up from about $251 billion a year earlier. The Hazel rollout also follows Custodia’s legal dispute with the Federal Reserve. In March, the U.S. Court of Appeals for the Tenth Circuit declined to revive Custodia’s challenge after regulators denied its master account application.