VersaBank Launches Test of US-Dollar Version of Bank-Issued Tokenized Deposits

VersaBank’s wholly owned subsidiary, VersaBank USA, launched an internal pilot program in the United States for the U.S.-dollar version of its bank-issued tokenized deposits.

The bank completed a similar pilot program of these tokenized deposits, dubbed Digital Deposit Receipts (DDRs), in Canada and is now testing them in the U.S. to ensure compliance with U.S. banking regulations, according to a Tuesday (Aug. 26) press release.

VersaBank USA expects to complete the pilot program of the U.S.-dollar version, USDVB, by the end of the year and then commercialize it in the U.S., both internally and through third-party partners, according to the release.

DDRs are one-to-one digital representations of cash deposits that were developed exclusively by VersaBank, the release said.

They are designed to provide the efficiency, cost savings, security and programmability of blockchain technology together with the safety and soundness of traditional banking, per the release.

“VersaBank fundamentally believes licensed banks, as the trusted, regulated safekeepers of personal and business cash assets and other valuables, are naturally positioned to do the same for digital currencies,” VersaBank founder and President David Taylor said in the release. “Our USDVB DDRs, developed in conjunction with law enforcement, represent the next step in the evolution of digital assets for both deposits and payments, and, importantly, a superior alternative to stablecoins based on their one-for-one representation of actual cash on deposit with our bank, the legal ability to pay interest, and FDIC insurance.”

PYMNTS reported in September that a far-flung roster of players, including monetary authorities, banking consortiums and banks, announced pilots or other programs aimed at testing the real-world application of tokenized deposits.

VersaBank said in November 2021 that it was testing DDRs amid increasing calls in North America and globally for oversight and regulation of private company-issued stablecoins.

In January, the bank said it transferred its DDR technology to a wholly owned subsidiary of DRT Cyber and renamed that subsidiary Digital Meteor. VersaBank said this move would generate additional shareholder value and support the bank’s planned divestiture of its cybersecurity business.

“We continue to be encouraged by the favorable stance of President Donald Trump and the new administration with respect to digital assets and the role they can play in the future of banking and commerce, not only in the United States but around the world,” Taylor said at the time in a press release.