Hybrid Tokenized Deposit and Stablecoin Interoperability Framework for Regional Banks

Stablecoins have emerged as a significant innovation in blockchain-based financial infrastructure, enabling near-instant settlement, programmability, and global accessibility. However, their rapid adoption presents a structural risk to traditional banking institutions, particularly regional banks that rely heavily on customer deposits for lending and liquidity management. Recent projections estimate stablecoins could drain up to $500 billion from U.S. bank deposits by 2028, disproportionately affecting regional banks due to their funding structures. Tokenized deposits, issued as regulated digital representations of commercial bank money, offer a viable institutional response by combining blockchain settlement efficiency with regulatory oversight. However, these systems typically operate in permissioned environments with limited interoperability with public blockchain stablecoin ecosystems. This paper proposes a hybrid interoperability framework integrating tokenized deposits, permissioned access vaults, and blockchain interoperability gateways to enable secure, compliant conversion between bank-issued digital money and public stablecoins. The framework preserves bank balance sheet integrity while enabling participation in emerging digital asset settlement networks.