Federally chartered cryptobank Anchorage Digital is deploying infrastructure that allows banks to issue tokenized deposits, joining a growing effort by financial institutions to bring traditional bank money to blockchain networks.
The bank said on Monday that its new platform will help banks offer 24-hour payments and settlement services using blockchain technology without replacing their existing core banking systems.
“Many of the banks we are starting to work with are thinking about tokenized deposits, and how do we start doing that? [them]”said Anchorage Digital CEO Nathan McCauley in an interview with CoinDesk.
The product works by creating a blockchain-based representation of customer deposits while keeping the underlying funds within the bank’s traditional deposit accounts. Anchorage will provide the blockchain infrastructure, wallet management and smart contract technology, while the banks will maintain customer relationships and custody of deposits.
The move comes as banks increasingly look for ways to offer faster payments and settlements in a financial system that still largely operates on business hours and batch processing.
