VersaBank USA launches tokenized deposit pilot program

VersaBank (TSX: VBNK) (NASDAQ: VBNK) announced that its subsidiary VersaBank USA has launched an internal pilot program for its tokenized deposits in the United States. The program tests USDVBs, which are digital representations of cash deposits on blockchain platforms.

The pilot program aims to demonstrate functionality, security and operational integrity of the bank's Digital Deposit Receipts (DDRs) in a US dollar environment while ensuring compliance with US banking regulations, including the Bank Secrecy Act and Office of Foreign Assets Control requirements.

USDVBs will be issued at a rate of 1 USDVB for each $1.00 on deposit with VersaBank USA. The tokens will operate on Algorand, Ethereum and Stellar blockchains through VersaBank's VersaVault platform, with access managed through its VersaView e-wallet system.

The testing will involve thousands of transactions of minimal value, starting with controlled internal testing and expanding to limited external deployment with designated deposit partners. VersaBank USA expects to complete the pilot program by the end of 2025.

"We believe VersaBank USA's USDVBs are the first operational, tokenized deposit issued by a nationally licensed bank in the United States," said David Taylor, founder and president of VersaBank.

VersaBank USA will seek the Office of the Comptroller of the Currency's non-objection before launching the product commercially. The bank previously completed a similar pilot program in Canada.

The DDRs differ from traditional stablecoins as they represent actual cash deposits held by a federally chartered bank, can pay interest and qualify for FDIC insurance coverage under applicable policies.

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