Hazel Network toggles bank deposits into stablecoins for 600+ banks

The pilot phase started in March 2025. Custodia and Vantage completed what they describe as the first US bank-issued tokenization of dollar demand deposits on a public blockchain. That pilot included real payments for logistics firms, not a sandbox test.

On October 23, 2025, the platform was officially announced with an open invitation for banks to join the 2026 rollout. By March 2026, the two banks had secured an agreement with Participate, a network covering roughly 600 community and regional banks, to integrate the tokenized deposit system.

The practical use cases being pitched include cross-border payments and automated financial triggers. These are the kind of programmable money features that crypto has long promised but rarely delivered through regulated banking channels.

The GENIUS Act, enacted in July 2025, created a federal framework for payment stablecoins. The Hazel model appears designed to comply with the new rules on reserve requirements, issuer licensing, and consumer protections. That legal clarity may matter more for adoption than the technology itself.

For the sector, this is a direct challenge to the current stablecoin duopoly of USDC and USDT. If 600 banks can offer their own branded stablecoins that are also FDIC-insured deposits, the competitive advantage of existing stablecoins shrinks. The question is not whether the tech works -- the pilot proved that. The question is whether enough banks will trust a shared Ethereum network and whether the GENIUS Act's oversight will keep the system compliant as it scales.