Definition ∞ A Deposit Token is a digital representation of a real-world asset or value held in custody. It signifies ownership or a claim on a specific quantity of an underlying asset, such as fiat currency or commodities, that has been deposited with a custodian. These tokens facilitate the transfer of ownership and the execution of transactions involving the represented asset within a digital environment. Their creation typically involves a custodial arrangement ensuring the token’s redeemability for the actual deposited item.
Context ∞ The current discourse around Deposit Tokens often involves their potential role in stablecoin mechanisms and regulated financial markets. Questions persist regarding the transparency and security of the custodial arrangements underpinning these tokens, particularly in the context of potential systemic risks. Future considerations include the regulatory treatment of these tokens and their integration into broader financial infrastructures.
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