For context, read this profile alongside the financial-licensing map and the crypto-wealth infrastructure guide. It is a case study in regulated stablecoin and payment infrastructure, not a product recommendation. Primary source: Vantage Bank announcement.
While the market argues about stablecoins, two regional banks have shown a third way: a token that legally remains an ordinary bank deposit. Avit, from Custodia Bank and Vantage Bank Texas, became the first tokenised deposit of a US bank on a public blockchain — issuance on Ethereum mainnet took place on 25 March 2025.
By 2026 the story had split in two. The product line reached a network of ≈600 banks and the consortium architecture of Hazel Network, the idea was picked up by giants such as JPMorgan, and Custodia itself reached the US Supreme Court in its fight over a Federal Reserve master account. Both lines deserve the attention of the client and of the builder of banking structures alike.
Background
Custodia was founded in February 2020 in Cheyenne under the name Avanti. Its founder, Caitlin Long, spent 22 years on Wall Street, including senior roles at Morgan Stanley, and is a driving force behind Wyoming's blockchain legislation. The bank obtained a Wyoming SPDI (special purpose depository institution) charter in October 2020 and raised a $37m Series A in March 2021 with participation from, among others, Coinbase Ventures; together with the seed and a 2022 follow-on round, ≈$48m has been raised.
The SPDI framework itself sets tight mechanics. Under the rules of the Wyoming Division of Banking, such a bank holds 100% of client fiat deposits in unencumbered liquid assets — dollars and level 1 high-quality liquid assets — lending out of client funds is prohibited, and FDIC insurance is optional and in practice absent. The full-reserve model means the deposit is always available for redemption, and the bank has to earn its keep on fees.
Vantage Bank Texas is the opposite type: an FDIC-insured state-chartered bank from San Antonio, ≈$4.5bn in assets, CEO Jeff Sinnott, and a historically strong correspondent franchise on the US–MX corridor. The assembly is symmetrical: Custodia brings the blockchain stack and SPDI infrastructure, Vantage brings insured deposits, Fedwire/ACH and the Mexican corridor.
Products and pricing
Avit is a tokenised demand deposit in ERC-20 form on Ethereum mainnet. In the March 2025 launch the banks ran an eight-stage series of operations with a real client: minting tokens, withdrawal into self-custody, B2B payments outside the bank perimeter and redemption back into a dollar deposit. Custodia is responsible for issuance, redemption, custody and transaction monitoring through its Avit Management System (built on US patent 11,392,906 for tokenising deposits on permissionless networks); Vantage handles the fiat reserves and the classic rails.
The US–MX corridor moved from slideware into practice fast: as early as 5 May 2025 the logistics company DX Xpress ran the first cross-border settlements in tokenised dollars through the US banking system — seconds per transfer at minimal cost, with drivers paid within an hour of delivery. Sinnott describes the value with the formula "faster, cheaper and programmable payments"; Long describes it as corporate treasurers gaining the network effects of public blockchains while keeping bank compliance.
The product was then scaled to the industry. On 23 October 2025 a tokenised deposit platform for US banks and credit unions opened (jointly with Infinant Interlace); on 19 March 2026 a partnership with Participate was announced — a loan participations platform with a network of ≈600 banks, where Avit became the settlement leg; among live use cases American Banker also mentions a restaurant chain settling tips. On 7 April 2026 the trio demonstrated the first on-chain payment on a loan participation: reconciliation, balance updates and the movement of money happen in sync within minutes — against days of manual wire transfers and spreadsheets. The roles are distributed transparently: Vantage is reserve manager, Custodia is the blockchain infrastructure, Participate is the orchestration layer.
The architectural finale is the Hazel Network white paper of 18 June 2026: a single smart contract in which the token behaves as a deposit inside the consortium and as a stablecoin outside it. Three integration tiers are provided for banks (from no core integration at all up to a real-time API, with basic implementation taking 4–6 weeks), and full availability is announced for Q4 2026. Pricing on both lines is not public (as of August 2026): Custodia offers accounts, custody and APIs for digital asset businesses, fintechs and banks with pricing on request, and the site honestly warns "some services not currently available". The revenue model of a bank with 100% reserves rests on fees for payments, custody and token services.
Competitive landscape
A neighbouring Wyoming SPDI, Kraken Financial, shows an alternative trajectory: without litigation, the Kansas City Fed approved a limited-purpose master account for it on 28 January 2026 with an initial term of one year. Tellingly, as of August 2026 the account remains non-operational and client wire transfers still go through the intermediary Dart Bank. Such trimmed approvals among new types of players are few: besides Kraken there are Numisma Bank (wholesale banknote distribution) and Puerto Rico's Cooperativa.
Large banks have meanwhile validated the idea itself. On 12 November 2025 JPMorgan opened JPMD to institutional clients — a deposit token on the public L2 Base, the first from a systemically important bank; in June 2026 JPMorgan, Bank of America and Citi, together with The Clearing House, announced work on a shared tokenised deposit network. For the Custodia–Vantage duo this is at once a validation of the thesis and direct competitive pressure; their bet is the thousands of community banks to whom a consortium of giants is unlikely to open its doors.
What it means for the client
The main point for a high-net-worth client with cross-border settlements: a tokenised deposit legally remains a bank deposit. That legal nature is familiar to courts, regulators and counterparties' compliance officers, while settlement runs at the speed of a public blockchain, around the clock and without waiting for banking hours — the DX Xpress case showed seconds where a correspondent chain takes days.
Hence the practical advantage over stablecoins: questions about the quality of a non-bank issuer's reserves and its regulatory status fall away. When choosing a provider, look at which bank stands behind the token, how deposit insurance is arranged (FDIC coverage sits on the Vantage side; an SPDI has none) and which corridors actually work — the US–MX link is the benchmark so far.
Under the hood
The legal trick is hidden in the definitions. The GENIUS Act describes a payment stablecoin as a digital asset with an obligation to redeem at a fixed value and explicitly excludes "a deposit" from the definition; a separate proviso preserves banks' right to issue "digital assets that represent deposits". Avit is engineered precisely for that exclusion — the path to tokenised settlement without a stablecoin licence is open to banks, and Long has said plainly that the regulatory clearances took six years.
Hazel Network takes the construction to dual-mode. Inside the banking perimeter the token is an obligation of the holder's bank, an ordinary deposit with all its protections, including FDIC insurance at insured participants; on leaving the perimeter it automatically becomes an obligation of Custodia, reserved 1:1, with the stated aim of obtaining the status of a regulated GENIUS stablecoin. Reserve requirements are wired in at the protocol level, and the reference contract is published on Ethereum mainnet.
The second insight is the price of access to the Fed. Custodia, with a 2020 SPDI charter and ≈$48m of capital, has worked for years without a master account: the Kansas City Fed rejected its application in January 2023, and since then the business model has hung partly on the courts and on intermediary banks. The Kraken example adds a sobering touch: even an approval that is granted turns into months of operationalisation. The conclusion for the builder: a charter by itself does not guarantee access to the payment system — budget for intermediaries and for litigation.
Regulation and status
The litigation line: on 31 October 2025 a Tenth Circuit panel decided the master account dispute in the Fed's favour; on 13 March 2026 rehearing en banc was denied by 7–3 with a sharp dissent from Judge Tymkovich; on 11 July 2026 a cert petition was filed with the Supreme Court — Custodia Bank v. Federal Reserve Board of Governors, the final instance.
In the background, on 20 May 2026 the Fed proposed skinny payment accounts — trimmed access to the payment system for legally eligible special charters, with review in roughly 90 days. The package comes with tight limits: balance caps, zero interest on balances, no discount window, no intraday credit and no cash, check or ACH services; Governor Michael Barr voted against, citing AML risks. Comments are being collected and there is no final rule yet — if adopted, it could partly defuse the original conflict between Custodia and the Fed.
FAQ
How does Avit differ from a stablecoin?
Avit is issued by a bank as a tokenised form of an ordinary demand deposit, and the GENIUS Act explicitly excludes deposits from the definition of a payment stablecoin. A stablecoin holder has a claim on a non-bank issuer and carries questions about the quality of its reserves; in Hazel Network the token actually changes its character depending on whether it sits inside the banking consortium.
Why does Custodia need a Fed master account?
A master account opens direct access to the Fed's payment system without intermediary banks. Custodia received its Wyoming SPDI charter back in October 2020, but the Kansas City Fed rejected its account application in January 2023; after the loss in the Tenth Circuit the dispute reached SCOTUS — the cert petition was filed on 11.07.2026.
What changed on 19.03.2026?
Custodia and Vantage announced a partnership with Participate, a loan participations platform bringing together ≈600 banks. The starting scenario is on-chain settlement of participations in commercial loans: the asset and the payment move at the same time. The first production payment was demonstrated on 7 April 2026, compressing processes from days to minutes.
What is a skinny master account?
It is the trimmed payment account the Fed proposed on 20 May 2026 for special charters such as Wyoming SPDIs: access to the payment rails with review in roughly 90 days, but with balance caps, no interest on balances, no discount window and no intraday credit. There is already a precedent — Kraken Financial obtained a similar limited-purpose account on 28.01.2026, though six months later it is still being brought into service.
How much do Custodia's services cost?
There is no public price list (as of August 2026): the bank serves US digital asset companies, fintechs and banks — deposit accounts, custody and APIs on terms by request. The 100% reserve model means earnings come from fees for payments, custody and token services, without lending out client funds.