Tokenized deposits have suffered from an openness challenge. While stablecoins can be transferred to anyone with a blockchain wallet, that’s not the case with tokenized deposits. Until now. Whether issued by a single bank or a multibank network, tokenized deposits can only be transferred to customers of participating banks, creating a walled garden. The Hazel Network, founded by Vantage and Custodia banks, has launched an elegant solution to this challenge. The network went live on Ethereum mainnet in March 2026 and plans to be accessible to member bank customers by Q4 2026.
It uses a unified token. When the token sits in a wallet of a member bank, it is a tokenized deposit. But a member bank’s customer can transfer the token to anyone, even someone outside the network entirely. When the token is transferred to a non bank wallet, the same token morphs from a tokenized deposit to an Avit stablecoin, with no need to mint or exchange for a stablecoin. It’s the same token with all the action happening on the back end.
So how does the token transformation work? When inside the bank consortium perimeter, the token is a liability of the customer’s bank, like any bank deposit, with all the legal protections and FDIC insurance that come with that. When it transitions to the Avit stablecoin, it becomes a liability of the stablecoin issuer Custodia, backed by 1:1 reserves. It loses FDIC insurance, and is regulated under the GENIUS Act.
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