This chapter takes the worked example introduced in Chapter I, Kinexys Digital Payments, and expands it into a full treatment of tokenised deposits as a category, with DBS Token Services as the canonical APAC counterpart. The audience already knows that a stablecoin is not a bank deposit and a bank deposit is not a stablecoin (Stablecoin types covered the four flavours of stablecoin and explicitly stayed off this terrain). The questions worth answering here are why a bank would build its own tokenised cash, how the legal characterisation differs from a stablecoin in ways that matter to a treasury allocator, what the cross-bank transferability problem looks like in production, and how the regulatory perimeter sits in each major APAC jurisdiction.

Definition

A tokenised deposit is a digital representation of a customer's deposit claim on a specific bank, recorded on a programmable ledger such that the ledger entry is the operative record of the depositor's identity, with the bank's general ledger remaining the system of record for the underlying liability.

The legal mechanics matter and tend to get lost. A bank deposit is, at law, an unsecured loan from the depositor to the bank. The depositor hands the bank money; the bank promises to repay on demand or on terms; the relationship is contractual, not custodial. A tokenised deposit is the same legal instrument with the depositor's claim represented as a transferable record on a chain. The token is not a separate asset. It is a medium for naming who currently holds the bank's deposit liability, in the same way that a passbook entry, a chequebook draft, or a credit-card balance line is a medium for that purpose.

The depositor's claim is what is being tokenised. The bank's deposit liability is what is being represented. The chain is where the representation lives. None of those words is interchangeable, and conflating them in a meeting with bank counsel is a fast way to lose the room. The BIS Garratt-Shin paper on the singleness of money sets out why the distinction matters at the system level: a tokenised deposit at Bank A and a tokenised deposit at Bank B are the same unit of account only as long as the inter-bank settlement layer keeps them at par with each other, which is a property of the architecture, not of the chain.

Two further pieces of vocabulary. Single-name credit risk is the risk that the specific bank holding the deposit fails. A tokenised deposit at Bank A carries Bank A's credit risk; transferring the token to a customer of Bank B does not transfer Bank A's credit risk to Bank B unless the underlying liability also moves between the banks, which requires explicit inter-bank settlement mechanics. Settlement coin is the term used for instruments that look like tokenised deposits but are issued by a separate-licensed institution holding central bank reserves, with Fnality the canonical example. The legal characterisation of a settlement coin is genuinely novel and sits between tokenised deposit, e-money, and wholesale CBDC (wholesale central bank digital currency).

The Basel framework has settled the prudential side of this distinction. Under SCO60, a tokenised traditional asset that meets the classification conditions is treated as Group 1a, with capital broadly tracking the underlying. A tokenised deposit issued by a regulated bank under a designated system typically clears that bar, which is what unlocked the wave of bank-led pilots through 2024 and 2025. The BIS Annual Economic Report 2024 chapter on tokenisation frames the same point at the system level: tokenised deposits are the commercial-bank-money leg of the unified-ledger model, and most of the policy work over the last two years has been about how to wire them to the wholesale-CBDC leg without losing the legal substrate.

For an operator coming from a stablecoin product seat, the right mental switch is that you are not designing an issuer. You are designing a transfer mechanism for a liability that the bank already has on its books. That changes which questions are load-bearing, which is what the rest of this chapter works through.