With HSBC, Lloyds and JPMorgan all committing token deposits on the Canton Network, Bernhard Elsner, Chief Product Officer at Digital Assets, explains why the instrument is structurally different from stablecoins and how Canton’s architecture eliminates bridge risk rather than just managing it.
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- Token deposits carry the full legal status of a bank deposit, with capital requirements, supervisory oversight, and deposit insurance that stablecoin holders do not receive.
- HSBC has completed a deposit token trial in Canton, Lloyds has issued its first GBP token on a public blockchain using Canton, and JPMorgan will bring the JPM token to Canton in a phased rollout in 2026.
- Canton’s atomic composability allows token deposits to move across applications without the risk of bridging, enabling true delivery-to-pay settlement where the cash leg and security leg are settled simultaneously.
The token deposit market is accelerating. HSBC Bank has completed a pilot to simulate the atomic issuance and settlement of its token deposit service on the Canton Network. Lloyds Bank issued token deposits in sterling in Canton and used them to purchase tokenized gold from Archax. JPMorgan’s Kinexys unit will bring JPM Coin locally to Canton in a phased integration throughout 2026. Behind all three deals is Digital Asset, the creator of the Canton Network, which is known as crypto.news. I mentioned It positions the network as the only public layer of blockchain designed specifically for institutional finance, combining configurable privacy, atomic composability, and regulatory compliance in a single infrastructure layer.
Token deposits and Canton Network deployments raise a fundamental question: What makes these coins different from stablecoins?
Bernhard Elsner, Chief Product Officer at Digital Asset, He said crypto.news that the distinction is fundamental and drives everything else about how the instrument behaves. “Token deposits are a digital representation of a commercial bank deposit on a blockchain or other DLT platform. Unlike many other digital assets, these tokens are the bank’s own responsibility to their holder, and carry the same legal status as pounds or dollars held in a traditional deposit account,” Elsner said. In contrast, a stablecoin holder is a creditor of a private issuer and has recourse to a pool of reserve assets. The holder of the encapsulated assets relies on the integrity of the bundled contract as well as any existing custody arrangements behind it. The holder of token deposits is a depositor, with capital requirements, supervisory oversight, KYC, and AML inherited from a bank and, in most jurisdictions, deposit insurance. “For institutional cash management, this is the difference between a tool that you can put working capital into and one that you can only pass through,” Elsner said. DTCC has already done so Selected Canton intends to tokenize US Treasuries, which Elsner described as converting token deposits into a physical cash leg that enables true atomic delivery in exchange for payment between regulated assets and regulated banks’ funds.
Token deposits and stablecoins are complementary, not competing
The difference between the two instruments does not mean that they are rivals. Elsner is direct on this point: stablecoins improve access and liquidity, while token deposits improve balance sheet integrity and regulatory certainty. “Although these assets have different trade-offs, it is important to remember that they are complementary to each other,” he said. “We expect to see token deposits supported alongside stablecoins and other digital assets as institutions determine which tool best fits their workflow.” It is the specificity of the Canton and its original composability that makes this coexistence possible at the infrastructural level. In Canton, a tokenized deposit operates as a direct, regulated banking liability, meaning it is not a wrapped claim, IOU, or separate bearer instrument. It never deviates from the legal and operational framework under which it was issued. This is what gives organizations the confidence to use working capital and not just guidance. As did crypto.news trackingJPMorgan’s Naveen Mallela described deposit tokens as a “practical, revenue-generating alternative” for institutions that want speed and security without leaving the banking system, a description that aligns perfectly with what Elsner describes as the tool’s institutional value proposition.
How Canton eliminates bridge hazards rather than manages them
The issue of interoperability is where the Canton architecture makes its most significant business claims. Elsner views the lack of interoperability not as a technical inconvenience, but rather as a structural impediment to meaningful scale. “Interoperability is critical to enterprise adoption, otherwise these assets will remain trapped in fragmented silos and unable to reach meaningful scale,” he said. “Assets that cannot transcend their original platform cannot be financed, reused, or integrated into broader financial workflows.” Most current DvP implementations don’t achieve true atomicity, according to Elsner, because settlement typically relies on intermediaries, pre-funding, or chained operations between systems, which introduces latency and residual risk. In Canton, the stock leg and cash leg can settle in a single atomic transaction across two different applications with no bridge in the middle. “Settlement risks are not managed,” Elsner said. “They are eliminated at the infrastructure level.” The HSBC beta demonstrated exactly this, simulating the atomic settlement of token deposits against other digital assets without the token leaving the institutional framework of the issuance. Such as crypto.news NotarizedCanton will process over $350 billion in token value daily in 2026, with DTCC, LSEG’s Digital Settlement House, and now JPMorgan all selected as the core settlement infrastructure.
Elsner said he expects token deposits and stablecoins to continue expanding in tandem as different institutional workflows determine the most appropriate instrument swaps.
