Tokenized Deposits and Interoperability in the Future of Banking

In August 2026, UOB and HSBC completed live cross-border transactions using tokenized deposits on Swift's new digital ledger. The milestone reflects a broader shift in banking, as major financial institutions advance tokenized deposit services, invest in digital asset infrastructure, and explore new ways to move money across borders.

Yet as more banks develop their own solutions and new networks enter the market, these systems must be able to communicate, transfer value, and settle transactions across different infrastructures while meeting banks' requirements for security, confidentiality, and regulatory compliance.

This challenge was central to discussions at Sibos 2026, held in Miami from September 28 to October 1. Under the theme Digital finance for AI-driven economies, the conference brought together financial institutions, policymakers, and technology providers to examine the technologies and operating models shaping global finance.

Cosmos attended Sibos 2026, represented by Barry Plunkett, Co-CEO, Eran Barak, Chief Commercial Officer, and Ian Kane, Head of Partnerships. Our team met with financial institutions and industry participants to discuss how tokenization can help banks retain and grow deposits, enable 24/7 payment settlement, and expand services such as programmable escrow through their existing banking infrastructure.

Throughout the event, several themes emerged from our conversations and the broader conference discussions:

• Tokenized deposits and stablecoins: Banks are exploring their respective roles in institutional payments, with tokenized deposits gaining attention for applications within the regulated banking system.
• Interoperability: Connecting independent ledgers while maintaining security, confidentiality, and operational control remains a major challenge.
• Fragmentation of digital asset networks: The growing number of competing infrastructures is increasing the need for cross-network coordination and common standards.
• Emerging security risks: AI-driven transactions and quantum computing are raising new questions about the resilience and security of financial infrastructure.

In the following sections, we examine these key takeaways from Sibos 2026, the challenges banks are working to address, and their implications for the adoption of tokenized money and digital asset infrastructure.

Tokenized deposits are gaining ground as banks evaluate the role of stablecoins

One of the most consistent themes at Sibos 2026 was the growing interest in tokenized deposits as an extension of existing banking services.

For banks, the distinction between tokenized deposits and stablecoins has important implications for their business models. Tokenized deposits represent commercial bank money and remain liabilities of the issuing institution. This allows banks to explore programmable payments and faster settlement while maintaining the existing deposit relationship with their customers.

Stablecoins serve a different role. They can facilitate transfers across digital asset networks, particularly in environments where participants do not share a banking relationship. However, their use introduces additional considerations around issuer exposure, redemption arrangements, regulatory treatment, and integration with existing banking systems.

Conversations at Sibos suggested that many banks see tokenized deposits as particularly relevant for funds held within the regulated banking system, including corporate treasury balances and institutional payments. Stablecoins were more frequently discussed in connection with transferring value beyond bank-controlled environments.

Institutional adoption is progressing, but use cases are still developing

Several major banks have already introduced tokenized deposit capabilities. HSBC has expanded its tokenized deposit services across multiple markets, while Citi continues to develop Citi Token Services for institutional clients. However, discussions at Sibos also highlighted that the industry has yet to establish a single use case capable of driving widespread adoption.

For banks evaluating tokenized deposits, the immediate opportunity lies in applications with measurable operational or commercial benefits, including:

• Enabling payments and settlement outside conventional banking hours
• Improving liquidity movement across accounts and jurisdictions
• Supporting programmable payment conditions for escrow and other financial services
• Reducing manual reconciliation across payment and settlement processes

The challenge is translating these capabilities into services that customers will adopt and that banks can operate within their existing regulatory and risk-management frameworks.

Interoperability remains a major obstacle to scaling tokenized money

Participants repeatedly emphasized the risk of developing isolated networks that cannot communicate or settle with one another. Deutsche Bank raised concerns about the emergence of "digital islands," while major institutions including JPMorgan, Citi, HSBC, BNP Paribas, and BNY identified interoperability as an important requirement for broader adoption.

A tokenized deposit issued by one bank has limited utility beyond its own environment if other institutions cannot receive, recognize, or settle it through compatible infrastructure. Banks need to support cross-system transactions while maintaining control over their assets, transaction data, and operational processes.

Interoperability involves several technical and operational requirements that extend beyond moving a digital asset between ledgers. Banks must account for differences in token standards, messaging formats, settlement processes, and how jurisdictions and institutions treat transactions legally. They also need to define how they verify transaction validity, represent liabilities across systems, and protect sensitive financial information.

For regulated institutions, a viable approach must support:

• Confidentiality: Protecting sensitive transaction and customer information
• Security: Verifying transactions and ledger states through mechanisms appropriate to the participating systems
• Operational control: Allowing institutions to maintain authority over their own infrastructure and transaction processes
• Auditability: Providing traceable records that support compliance and reconciliation
• Settlement coordination: Ensuring transactions are executed consistently across participating systems

The role of IBC in connecting independent ledgers

Cosmos has been actively developing infrastructure through the Inter-Blockchain Communication Protocol (IBC), which enables direct, peer-to-peer communication between independent digital ledgers, using cryptographic verification to establish trusted connections without requiring a centralized intermediary.

For financial institutions, this approach can support connectivity between different ledger environments while allowing each participant to maintain control over its own systems. IBC can also be extended to connect with existing banking infrastructure and other systems that support the required cryptographic functionality.

The growing number of digital asset networks is adding complexity for banks

Initiatives such as Swift's digital ledger, Partior, Cari Network, Fnality, Canton Network, and Google Cloud's digital asset infrastructure illustrate the range of approaches emerging across the financial services industry. These platforms differ in their governance models, participation requirements, settlement arrangements, and underlying technology.

For banks, this creates a more complex environment for making long-term infrastructure decisions.

Swift's reach creates opportunities and implementation requirements

Swift's work on digital ledger infrastructure and its established network of financial institutions provide a potential foundation for broader adoption of tokenized payment services. However, participation in ledger-based settlement requires capabilities that banks may need to develop or integrate into their existing systems.

These can include issuing or handling tokenized assets, operating compatible wallets, deploying or interacting with smart contracts, and supporting transactions between participating institutions.

For banks with established core banking infrastructure, developing these capabilities involves technical integration, operational controls, and coordination with counterparties. The challenge is particularly relevant for institutions that want to participate in emerging networks without replacing their existing banking systems.

Banks may need to connect to several networks

Many network operators are focused on launching services, onboarding participants, and establishing their own transaction flows. Cross-network integration may therefore develop more slowly than the individual networks themselves.

As a result, banks may eventually need to interact with multiple tokenization and settlement environments to serve different customers, counterparties, and markets. This increases the importance of infrastructure that can coordinate transactions across systems without requiring a bank to adopt a single network for every use case.

“The future of institutional finance will involve multiple networks, each serving different markets and use cases. Banks are already building the infrastructure to issue and manage tokenized assets including deposits and securities. The next challenge is making those systems work with counterparties. I expect connectivity across private and public digital rails to become one of the most important factors in how banks evaluate their digital asset strategies over the coming years.”

Eran Barak, Chief Commercial Officer, Cosmos

AI and quantum computing are introducing new security considerations

As financial institutions explore AI-driven automation, the prospect of software agents initiating, coordinating, or executing financial transactions introduces additional questions around authorization, accountability, and security. Agent-driven payments may require systems to verify the identity and permissions of participating agents, enforce transaction limits, and maintain records of automated decisions and actions.

For banks, these requirements become particularly important when automated processes interact across institutional boundaries. Although AI-agent communication remains an emerging area, the discussions at Sibos suggested that institutions are beginning to consider how existing payment infrastructure and security frameworks may need to evolve.

Quantum computing presents a different category of risk. Sufficiently capable quantum computers could eventually compromise widely used public-key cryptographic algorithms, creating long-term security concerns for financial systems that depend on digital signatures and cryptographic authentication.

For banks and other regulated institutions, preparing for this possibility involves understanding their cryptographic dependencies and developing plans to adopt post-quantum security standards. Regulatory expectations and industry standards are also evolving, increasing the importance of building systems that can adapt as cryptographic requirements change.

Cosmos has been investing in this area through the Ledger Security 2026.1 release, which introduced support for post-quantum secure signing options, alongside additional security capabilities for digital ledger operators.

What we took away from Sibos 2026: The next phase of institutional adoption

One of our strongest impressions from Sibos 2026 was how quickly the conversation around digital assets has become part of mainstream banking discussions. Financial institutions are making concrete investments in tokenized money, and more initiatives are moving into production. We expect the next phase of adoption to shift how banks choose and deploy their digital asset infrastructure.

As more networks become operational, banks will increasingly need to support transactions across multiple platforms, jurisdictions, and forms of money. A financial institution may participate in Swift's ledger for cross-border payments, connect to another network for securities settlement, and operate its own infrastructure for tokenized deposits and programmable financial services.

In our view, this will make the ability to connect different systems as important as any individual network's capabilities. Banks will need infrastructure that accommodates different counterparties and services without requiring them to commit their entire digital asset strategy to a single provider.

We also expect adoption to become driven by customer-facing applications. Corporate clients are unlikely to choose banking services based on the underlying ledger technology. They will evaluate the availability of payments outside banking hours, the efficiency of moving liquidity, and the ability to automate financial processes. Banks that can translate tokenization into these practical services will be better positioned to demonstrate their commercial value.

For Cosmos, Sibos reinforced our commitment to developing infrastructure that allows financial institutions to adopt tokenization on their own terms. Through the Cosmos Tokenization Suite and IBC, we are focused on helping banks integrate digital asset capabilities with their existing systems and connect with counterparties across independent ledgers.

As more institutional networks launch, the industry will face pressure to make them work together. The institutions that plan for this connectivity early will have greater flexibility to adopt new services, enter new markets, and respond to changing customer needs.

Connect with the Cosmos team to discuss tokenized deposits and connectivity across financial infrastructure.

About the Author

Simona Negru is Content Marketing Manager at Cosmos, where she oversees the full content marketing funnel across brand positioning, GTM, PR, sales enablement, and content campaigns. With 13+ years in B2B marketing across fintech, payments, fraud prevention, and digital assets, she has helped companies define their voice and grow their presence in competitive markets, securing 100+ media clippings annually and co-marketing presence at flagship industry events including Money 20/20, MPE, ICE, iGB, SBC, and Pay360. Her work has been featured in Merchant Payments Ecosystem magazine, Issue 88.