Deposit with tokens vs Stablecoins in Canton

As HSBC, Lloyds, and JPMorgan all commit to putting tokens on the Canton Network, Chief Digital Asset Product Bernhard Elsner explains why the instrument is structurally different from stablecoins and how Canton’s structure eliminates bridge risk rather than simply managing it.

The tokenized deposit market is growing rapidly. HSBC has completed a pilot simulation of the issuance and atomic settlement of its Tokenized Deposit Service on the Canton Network. Lloyds Bank took out a deposit with sterling tokens in Canton and used it to buy gilt tokens from Archax. JPMorgan’s Kinexys unit is bringing JPM Coin organically to Canton in a phased merger through 2026. Behind all these three agreements is Digital Asset, the creator of the Canton Network, as crypto.news reported placing the network as the only public layer of a single blockchain purpose built for institutional finance, privacy integration, compugulatory restructuring. infrastructure layer.

Tokenized Deposits Canton Network Deployments Raise an Important Question: What Makes These Different from Stablecoins?

Bernhard Elsner, Chief Product Officer at Digital Asset, told crypto.news that the difference is important and drives everything else about how the tool behaves. “Tokenized deposits represent a digital deposit of a commercial bank’s deposit on a blockchain or other DLT platform. Unlike many other digital assets, these tokens are the bank’s obligation to the owner, holding the same legal status as a pound or dollar sitting in a traditional deposit account,” said Elsner. The owner of a stablecoin, in contrast, is a creditor of a private provider and claims a set of assets. The owner of the winding-up estate depends on the integrity of the winding-up contract and any custodial arrangement behind it. A tokenized depositor is a depositor, with capital requirements, regulatory oversight, KYC and AML inherited from a bank, and in many places, deposit insurance. “In institutional capital management, that’s the difference between a tool that you can park working capital on and one that you can just pass through,” said Elsner. The DTCC has already chosen Canton to mark the US Treasury, which Elsner describes as turning token deposits into a physical leg of money that allows true atomic delivery versus payment between controlled assets and controlled bank money.

Tokenized Deposit and Stablecoins Are Complementary, Not Competing

The difference between these two instruments does not mean that they are enemies. Elsner is straightforward on this point: stablecoins work well for accessibility and liquidity, while token deposits improve balance sheet integrity and regulatory certainty. “Although these goods have different trades, it is important to remember that they complement each other,” he said. “We expect to see tokenized deposits being used alongside stablecoins and other digital assets as institutions decide which tool best fits their workflow.” Canton’s privacy and native harmony is what makes this coexistence possible at the infrastructure level. In Canton, the tokenized deposit acts as a direct, regulated bank obligation, meaning it is not a rolled-up claim, IOU, or separate instrument of the manager. It never leaves the legal and operational framework under which it was issued. That’s what gives institutions the courage to use it for working capital instead of just using the route. As crypto.news tracked, JPMorgan’s Naveen Mallela described deposit tokens as “an efficient, yield-generating method” for institutions looking for speed and security without leaving the banking system, a feature that coincides precisely with what Elsner described as the institution’s value proposition for the instrument.

How Canton is Eliminating Bridge Risk Rather Than Managing It

It is a collaborative question that Canton architecture makes its most important commercial claim. Elsner frames the lack of interaction not as a technical impediment but as a structural barrier to beneficial scale. “Collaboration is very important for the adoption of the institution, otherwise these assets will remain isolated and remain separate and will not be able to reach a meaningful scale,” he said. “An asset that cannot move beyond its native platform cannot be financed, reused, or integrated into the broader financial workflow.” Most current implementations of DvP do not achieve true atomicity, according to Elsner, because settlement often depends on intermediaries, advance funding, or sequential processes between systems, which introduce delays and residual risks. In Canton, the security leg and the currency leg can reside in the same atom across two separate applications without a bridge in between. “Residential issues are out of control. They are being eliminated at the infrastructure level,” said Elsner. HSBC’s pilot demonstrated this well, simulating the payment of an atomic deposit with tokens against other digital assets without the token leaving its issuing institution framework. As crypto.news is written, Canton is processing more than 350 billion worth of tokens daily by 2026, with DTCC, LSEG’s Digital Settlement House, and now JPMorgan all choosing it as their main settlement infrastructure.

Elsner said he expects deposit tokens and stablecoins to continue to grow alongside each other as different workflows determine which tool tradeoffs fit best.