Tokenized Deposits on Cosmos

Financial institutions are reassessing how money moves inside and across their organizations. Tokenized deposits and stablecoins have emerged as practical instruments for modernizing settlement, liquidity management, and cross-network payments. Rather than replacing deposits or central bank-issued currencies, these instruments extend them into programmable, interoperable environments that operate alongside core banking systems. For institutions focused on control, compliance, and predictability, the underlying ledger technology matters as much as the asset itself.

This article examines how tokenized deposits and stablecoins are issued today, highlights real-world case studies such as Progmat, and explains how the Cosmos stack supports institutional-grade issuance through interoperability, gated access, and integration with existing banking infrastructure.

Key takeaways

Tokenized deposits and stablecoins extend existing bank money into blockchain systems.
Institutional issuers require control, compliance, and predictable behavior.
Cosmos supports sovereign issuance with configurable governance and access rules.
Case studies such as Progmat show regulated assets operating at scale.
Interoperability and core banking integration are central to adoption.

Tokenized deposits and stablecoins: what institutions care about

Tokenized deposits represent claims on commercial bank money recorded on a blockchain, while stablecoins are typically issued against segregated reserves held at regulated financial institutions. In both cases, the objective is not speculation, but settlement efficiency, transparency, and programmability.

For banks and payment providers, these instruments offer benefits like faster internal transfers, improved liquidity management, and clearer audit trails. For financial institutions and enterprises, they reduce settlement delays and reconciliation overhead. The adoption of tokenized deposits hinges on whether issuers can maintain the required controls, including KYC and AML obligations, user access systems, corporate governance requirements, and redemption workflows.

Institutional tokenized deposit initiatives differ fundamentally from early models in the cryptocurrency industry; they are designed to fit within existing financial and regulatory frameworks rather than circumvent them.

Why Cosmos is suited for institutional issuance

The Cosmos technology stack powers over 200 independent blockchains, and its interoperability protocol has remained free of security exploits since launching in 2021. For institutions evaluating infrastructure for tokenized deposit issuance, this track record addresses a threshold concern: whether the underlying technology has been tested at scale.

Beyond security, the Cosmos architecture offers issuers control over the parameters that matter most for regulated asset issuance. Institutions can configure validator selection and establish governance processes, decisions that remain with the issuing institution rather than a shared public network. This means compliance logic, redemption workflows, and access controls could be embedded at the ledger level rather than layered on top of infrastructure designed for other purposes.

At the same time, Cosmos-based chains can connect to other networks through IBC. Issuers retain control over which connections to permit and can restrict transfers to approved counterparty chains. For tokenized deposits requiring strict compliance, this allows issuers to limit distribution to networks that meet their regulatory requirements rather than exposing assets to any chain that requests a connection.

Stablecoin case studies on Cosmos

Stablecoin initiatives on Cosmos illustrate how institutional issuers approach tokenized deposits in practice.

Progmat Coin: Japan's banking consortium stablecoin platform leveraging Cosmos

Progmat Coin is a stablecoin platform, co-developed by Datachain and backed by over 200 of Japan’s largest banks, financial institutions, and companies. The consortium plans to issue approximately ¥1 trillion in stablecoins over three years.

Project Pax, initiated by Progmat and Datachain, uses IBC as its native interoperability layer. The architecture preserves existing bank workflows while moving settlement to blockchain:

Instruction layer: Banks initiate payments through Swift's API, retaining familiar KYC/AML controls
Settlement layer: Progmat issues regulated stablecoins on both public and private blockchains
Interoperability layer: Cross-chain transfers execute via IBC, with Datachain's multi-prover security model meeting Japanese regulatory requirements

This design is designed to address the G20's four structural weaknesses in cross-border payments: cost, speed, access, and transparency, by eliminating correspondent banking chains, enabling real-time settlement, decoupling reach from correspondent relationships, and providing immutable records for regulatory reporting.

Project Pax demonstrates IBC's role in enabling regulated assets to move across blockchains while maintaining compliance.

Other tokenized cash initiatives on Cosmos follow similar principles: separating issuance from application logic, maintaining explicit governance, and integrating with institutional custody partners. This example demonstrates that Cosmos supports multiple issuance models without forcing a one-size-fits-all design.

Native Interoperability and EVM connectivity

The Progmat example illustrates how interoperability works in practice. But for any tokenized deposit to deliver value, it must connect to the networks and applications where institutions already operate without sacrificing the compliance controls established at issuance.

Cosmos achieves this through the Inter-Blockchain Communication Protocol (IBC), which enables point-to-point connectivity between independent chains. IBC's direct connection model reduces reliance on vendor-managed token bridges or intermediaries.

For institutions, connectivity to Ethereum-based applications is often a priority. Cosmos supports EVM compatibility through its Cosmos EVM framework, allowing tokenized deposits to interact with existing treasury, DeFi, and payment applications built on Ethereum. This connectivity enables tokenized deposits to interact with existing treasury, DeFi, and payment applications built on Ethereum. For compliance-sensitive transfers, institutions can restrict connectivity to approved networks and implement verification requirements on both sides of the connection.

The result is an infrastructure that enables institutions to issue on purpose-built chains while maintaining access to broader liquidity and application ecosystems.

Gated issuance and compliance controls

For institutions issuing tokenized deposits, compliance determines whether the asset can exist at all. Token issuers must ensure that all participants are identified and vetted. In many jurisdictions, AML and KYC requirements apply not only to initial issuance but also to secondary-market trading.

Cosmos-based chains allow issuers to embed compliance logic at the ledger level. Institutions can configure permissioned issuance, whitelisted participants, transaction limits, and verification requirements directly into the chain's architecture. This shifts enforcement closer to the point of issuance rather than relying solely on external controls.

For cross-chain movement, compliance enforcement requires coordination between networks. Issuers can restrict IBC connections to approved counterparty chains that implement compatible compliance standards. This approach, demonstrated in initiatives like Project Pax, allows institutions to limit distribution to networks meeting their regulatory requirements rather than exposing assets to any chain that requests a connection.

The result is a model where compliance rules are established at issuance and preserved through controlled connectivity. For institutions operating across multiple markets, this reduces operational complexity by encoding jurisdiction-specific rules into the chain's design while maintaining explicit control over where assets can travel.

Conclusion

Tokenized deposits and stablecoins represent a practical extension of existing bank money into programmable environments. Their success depends on control, interoperability, and compatibility with existing systems. Cosmos provides infrastructure that institutions can configure and control, with standardized interoperability, EVM compatibility, and configurable compliance logic.

Progmat demonstrates how regulated stablecoin infrastructure can be designed for scale while preserving predictability and oversight. As institutions continue to modernize settlement and payments, Cosmos provides a practical foundation for issuing and managing tokenized deposits within the structures they already trust.