Tokenized Deposits and the End of the Closed Loop: Standard Chartered & Fireblocks

Standard Chartered introduced tokenized deposits in Hong Kong, marking the first deployment of its kind within the Group. Corporate clients can now transfer commercial bank money between participating banks around the clock, with settlements conducted in central bank money. The initiative, developed with support from the HKMA’s Supervisory Incubator for Distributed Ledger Technology and powered by EnsembleTX infrastructure, aims to improve efficiency, interoperability, and predictability while reducing counterparty risk. Standard Chartered named Fireblocks as an ecosystem partner, collaborating on extending these capabilities to digital asset businesses already operating on the Fireblocks platform.

The tokenized deposits operate on a single permissioned rail across Standard Chartered’s network, designed to connect with other financial institutions from inception. The Group, which operates in 55 markets across Asia, Africa, and the Middle East, has long supported digital asset infrastructure through ventures like Zodia Markets and Libeara. The solution contrasts with stablecoins, which are open and permissionless, allowing anyone to hold and transfer them. The announcement highlights the need for a unified network connecting bank money, tokenized deposits, and stablecoins, with a neutral connector like the Fireblocks Network facilitating cross-system transfers.

From 2019 to early 2023, digital asset markets relied on a closed loop of bank networks for real-time transfers, with one major network processing $787 billion in 2021 alone. However, the collapse of key balance sheets in March 2023 disrupted this model, prompting a two-year rebuilding effort. During this period, stablecoins emerged as the dominant asset on the Fireblocks platform, with clients moving $3.7 trillion through the platform in the twelve months to September 2026. Standard Chartered’s tokenized deposits address this gap by enabling 24/7 transfers settled in central bank money, with early adopters already using them to settle tokenized money market funds.

The challenge now lies in ensuring sufficient liquidity for cross-border transactions, as most FX liquidity remains with banks off-chain. While stablecoin FX pairs like dollar-euro trade around $200 million daily on public exchanges, traditional FX markets handle trillions. OTC desks are scaling to bridge this gap, with Liquidity Market connecting suppliers directly to consumers. Tokenized deposits and bank on- and off-ramps aim to bring regulated balance sheets and FX liquidity onto the same rails, enhancing the scalability of blockchain-based payment flows. Fireblocks is exploring integrating bank money into its workflows with Standard Chartered to streamline these processes.