The Digital Dollar in Four Legal Forms: Deposit Tokens, Stablecoins, EMTs and Tokenised Funds

In a wallet all four look identical: a dollar unit that moves on a blockchain around the clock and settles in seconds. Legally four constructions sit behind the same interface — a bank deposit, an obligation of a licensed stablecoin issuer, electronic money, and a share in a money market fund. The wrapper decides who the holder has a claim against, how it is protected, where the holder stands in an insolvency, and whether yield is allowed.

This page is a framework for two decisions: which form to hold digital dollars in for working cash, savings and collateral — and which licensing construction to assemble for one's own token.

One function, four wrappers

All four forms move dollar value into a programmable entry on a distributed ledger; they differ in whose obligation stands behind the entry. For a tokenised deposit it is a bank — the token legally remains a deposit. For a payment stablecoin — an issuer under a dedicated statute, in the US the GENIUS Act. For an e-money token — a bank or an EMI under the EU's MiCA. Behind a tokenised money market fund stands no monetary claim at all but a security: a share in a portfolio of Treasury bills.

The key parameters of the three regimes the four forms fall under:

Tokenised deposit: the money stays in the bank

The first-ever tokenisation of a US bank's dollar demand deposits on a permissionless blockchain was Avit from Custodia Bank and Vantage Bank Texas; the giants followed, and London's Monument Bank opened the retail end.

The legal core is the same: the token is the bank's obligation to the depositor, FDIC or FSCS cover depends on an eligible deposit, institution, depositor, ownership records and the scheme limit, and the instrument lives outside the stablecoin perimeter — the GENIUS Act expressly excludes deposits from the payment-stablecoin definition. For banks this is a route to on-chain settlement without a separate licence — and without the ban on interest. The flip side: the token circulates only within the bank's or consortium's client perimeter — no free secondary market. The dual-mode Hazel Network architecture (white paper of 18 June 2026) tries to lift that constraint: inside the consortium the token behaves as a deposit, outside it — as a stablecoin. The full case study is in Custodia and Vantage.

Payment stablecoin: the GENIUS perimeter

The GENIUS Act, signed on 18 July 2025, gave the payment stablecoin its first federal definition — a digital asset redeemable at a fixed value. Issuance is reserved for permitted issuers:

• subsidiaries of insured banks;
• non-banks supervised by the OCC;
• issuers under comparable state regimes.

Once effective, GENIUS §11 gives holders of a permitted issuer's payment stablecoins priority in required reserves. If those reserves are insufficient, §11(d) gives the remaining claim first priority against the issuer's estate to the extent §4 required additional reserves. Regulated custodians' customer-property duties are addressed separately in §10. Eligible reserves must at least equal outstanding stablecoins, with monthly disclosure and no issuer-paid interest or yield. There is no state deposit insurance. The effective date is the earlier of 18 January 2027 or 120 days after final implementing regulations (§20).

The requirements bite on the earlier of 18 months after signing or 120 days after final rules; the statutory backstop date is 18 January 2027; a second date stands apart: from 18 July 2028 digital asset service providers may offer only stablecoins from permitted issuers. In May 2026 SoFi became the first US national bank with its own stablecoin; Stripe's stablecoin unit is entering via an OCC trust charter. Typology and reserves — in the stablecoins hub.

A licence of one's own is not the only door: alongside it runs a white-label model in which another firm's trust issues on its own charter. The type case is Bastion, a New York limited purpose trust supervised by the NYDFS and named sole issuance provider for Sony Bank's stablecoin initiative: on its own licence it covers issuance and redemption — redemption within T+2 — reserve management, custody and compliance, with reserve composition confirmed by monthly CPA attestations. For the sponsor this is a way to reach the market before its own charter lands; for the holder what matters is that the claim runs against the issuing trust and is limited to its reserves, not against the brand on the token.

E-money token: the European version

In the EU a single-currency token is an e-money token under MiCA: only a credit institution or an authorised EMI may issue it, the holder may redeem at par at any time, interest is prohibited, and reserves sit under a safeguarding regime. EMT issuance has required authorisation since 30 June 2024 with no transition period — MiCA's transitional window to 1 July 2026 (Art. 143(3)) covered only crypto-asset service providers. Any EMT denominated in a currency that is not an official currency of a Member State — significant or not — must halt new issuance once its use as a means of exchange within a single currency area exceeds 1 million transactions and €200 million a day (Art. 58(3), Art. 23). For an issuer this dictates "EMI plus CASP under one regulator", as assembled in Luxembourg.

The UK runs a parallel circuit: on 22 June 2026 the Bank of England dropped the proposed holding limits for individuals and businesses in favour of an initial £40 billion issuance cap per token; backing is 30% in unremunerated Bank of England accounts and up to 70% in short-dated gilts; the draft Code of Practice is due to be finalised by end-2026, with operation under the regime from 2027. The UK client-money perimeter — in the UK safeguarding and crypto regime overview; Asian frameworks — in Asia's stablecoin regimes.

Tokenised money market fund: cash that pays

The fourth form honestly pays interest — because legally it is not a payment instrument but a security: a share in a fund investing in Treasury bills and repo. The three largest funds in the class — by assets and role:

The tokenised Treasuries market hit $11 billion by 13 March 2026.

The main driver is collateral: a yield-bearing token instead of dead cash on margin. On 24 March 2026 BMO, CME Group and Google Cloud unveiled a tokenised cash and deposit platform for clearing collateral, and CME publicly contemplates both stablecoins and tokenised MMFs as margin. The price is securities status: KYC whitelists, subscriptions and minimums, NAV instead of par, and the fund's right to gate redemptions; such a token cannot be used to pay. The asset-class context is in RWA tokenisation.

Comparison table

The first table answers whose obligation was bought and how it is protected.

The second — what the holder gets for it and how freely the token moves.

The four forms in seven regimes

The same four wrappers exist wherever a financial centre has decided to regulate on-chain money, but each jurisdiction files them in its own legal boxes. For a holder booking cash in Hong Kong, Singapore, Tokyo or Dubai the useful question is which of the four is actually available there, under which statute, and what the local version adds or withholds.

HKMA EnsembleTX is a controlled real-value pilot for participating banks' tokenised deposits, initially using HKD RTGS for interbank settlement. MAS BLOOM supports industry trials in tokenised commercial-bank money and stablecoins. Neither announcement establishes a universal interbank-first, retail-later sequence. For each product, deposit classification and insurance eligibility depend on its bank, terms and legal regime.

The fund column is where Asia is ahead. Hong Kong opened tokenised classes of SFC-authorised funds to retail buyers from November 2023 and, by the SFC's count, had thirteen such products on public offer by March 2026, with money market funds first in line for weekend trading on licensed platforms. In the United States the same instrument is institutional by default and retail only through a few managers' own apps.

The e-money column matters because it is the fallback when no stablecoin licence exists. In Singapore, until the payment-services amendments pass, a dollar or Singapore-dollar balance with a regulated firm is e-money under a major payment institution licence, not a stablecoin with the MAS label. In Japan a prepaid instrument cannot be cashed out freely, which is why yen settlement moved to electronic payment instruments and deposit tokens instead. In the UAE only the dirham token may be used to pay for goods — dollar stablecoins stay inside the virtual-asset perimeter.

Need → where the form is most developed

The stablecoin regimes themselves — capital, reserves, redemption windows, retail access — are compared across eight jurisdictions in the stablecoins matrix; this table answers only which wrapper each centre offers.

Balance-sheet risks: what breaks in each form

For the deposit the risk is the bank itself: above any applicable insurance limit, claim ranking depends on the governing bank-insolvency law; tokenisation does not change that. For the stablecoin and the EMT it is depeg and reserve quality: even full coverage in short Treasuries does not cancel a redemption queue once confidence goes; until GENIUS bites, reserve discipline is down to the individual issuer. For the tokenised MMF the risks are fund risks: NAV floats, the fund may suspend redemptions, settlement is not always instant.

A separate layer is prudential. The Basel SCO60 standard has applied since 1 January 2026: stablecoins on permissionless blockchains fail the preferential Group 1b conditions and fall into Group 2 — a 1250% risk weight in subgroup 2b, and a Group 2 exposure limit of 1% of Tier 1 with a hard cap at 2%. Hence the banks' strategy: issuing your own deposit token on your own balance sheet beats holding someone else's stablecoin on it.

Working cash, savings or collateral: which form fits which job

Working cash — a regulated stablecoin or EMT, with routing between tokens and fiat outsourced to a provider. Large treasury balances — a tokenised deposit at an insured bank: familiar legal nature plus network speed. Savings cash and trading collateral — a tokenised MMF: short-Treasuries yield and growing acceptance as margin. How each of the four forms is reported — CARF or the amended CRS — is set out in the reporting block of crypto for private wealth.

Bank charter, GENIUS licence, EMI or fund: what to assemble for your own token

Choosing the form means choosing the licence. A bank charter opens the deposit token outside the GENIUS perimeter. A stablecoin requires permitted-issuer status — via a bank subsidiary, an OCC trust charter or a state licence. In the EU: an EMI to issue the EMT plus a CASP for circulation. The fund wrapper takes a registered fund, a manager and a transfer agent. The licensing map — in the regimes overview.

What to watch until 2028

When GENIUS takes effect under §20: part of the deposit-workaround motivation disappears and convergence accelerates — Hazel designs a token that changes legal nature at the consortium boundary, BlackRock — funds as stablecoin reserves. The Bank of England's systemic stablecoin regime starts in 2027. If CME and the clearing houses take tokenised MMFs into live margin, collateral demand becomes the class's main driver. Watch also JPMorgan, Bank of America and Citi with The Clearing House: a shared tokenised deposit network erases the border faster still.