Tokenized Deposit Token

Definition ∞ A tokenized deposit token is a digital representation of a fiat currency deposit held at a regulated financial institution. This token is issued on a blockchain and is redeemable one-for-one for the underlying fiat currency. It combines the benefits of blockchain technology, such as instant settlement and programmability, with the stability and regulatory oversight of traditional banking. These tokens aim to bridge conventional finance with digital asset ecosystems.
Context ∞ Tokenized deposit tokens are gaining considerable attention from central banks and commercial financial institutions as a potential form of central bank digital currency (CBDC) or commercial bank money on a blockchain. Discussions involve their regulatory treatment, interoperability with existing payment systems, and their role in facilitating instant, compliant transactions. Developments are focused on establishing robust legal and technical frameworks to ensure their stability, security, and broad acceptance in the digital economy.