Tokenized Deposits vs. Credit Union–Backed Stablecoins: What’s the Real Difference?

October 29, 2025

By Frank Mezza, Director of Blockchain for Institutions & Fintechs, Metallicus

When I speak with credit unions about blockchain, one question comes up almost every session: “What’s the difference between a tokenized deposit and a credit-union-backed stablecoin?”

I probably get this question at least once a week, and it’s a great one—because it captures the tension between modernizing what we already do and reimagining how money actually moves. The two sound similar on the surface, but the intent and impact behind them are very different.

Tokenized Deposits: Modern Infrastructure, Familiar Boundaries

A tokenized deposit is simply a digital representation of funds that already exist in a member’s account. The deposit never leaves the credit union’s balance sheet; it’s just expressed in a new form—one that can move instantly and settle automatically on modern rails.

Think of it as updating the plumbing. Tokenized deposits make back-office processes faster and cleaner. They enable real-time reconciliation, internal settlement between branches or partner institutions, and improved liquidity management.

But they’re still closed-loop. The value moves within the institution or a consortium network, not between consumers or across ecosystems. Tokenized deposits make existing systems more efficient—they don’t change the member experience.

Credit Union–Backed Stablecoins: Extending the Reach

A credit-union-backed stablecoin, by contrast, is a digital token issued by the institution and backed one-for-one by deposits or reserves. It behaves like money that can travel—between members, between apps, or even across participating credit unions—without needing to stay inside a single system.

This makes it interoperable. Stablecoins open doors for new member use cases: instant peer-to-peer transfers, on-demand merchant payments, programmable rewards, or community engagement initiatives. They move beyond operational efficiency and start touching how members actually experience their money.

Two Instruments, Two Purposes

For credit unions, both models serve real needs—but in different layers of the stack:

• Tokenized deposits are inward-facing. They help with settlement, treasury, and operational workflows.
• Stablecoins are outward-facing. They enable new digital experiences and ways to interact with members.

One is about efficiency; the other is about engagement. Both can coexist, and in many cases, they should.

The Regulatory Lens

Regulators have started drawing clearer distinctions between the two. Tokenized deposits remain within the insured perimeter, essentially an extension of existing accounts. Stablecoins, when backed by insured deposits and transparently managed, can still operate compliantly—but they introduce new considerations around interoperability, disclosure, and reserve management.

The good news is that both models can be implemented safely under existing guidance when designed with proper controls and auditability.

The Strategic Question for Credit Unions

So, which one makes more sense?

For most credit unions, the starting point is tokenization—modernizing infrastructure, improving back-office efficiency, and preparing for a world of real-time settlement.

But the real opportunity lies in stablecoins—creating new ways to connect with members, extend the brand into digital payments, and stay relevant as money itself becomes programmable.

In other words, tokenized deposits make you faster. Stablecoins make you visible.

I remind people: Both represent progress. One modernizes how credit unions work. The other redefines how members experience what credit unions stand for—trust, community, and ownership.

And that’s the real difference.

GoWest Solutions has partnered with Metallicus, the core developer of Metal Blockchain, to offer its members access to a collaborative Innovation Program focused on operationalizing Stablecoin use cases for the credit union industry. The Innovation Program, Stablecoin Pilot Sandbox, and Stablecoin Starter Kit are available free of charge to GoWest member credit unions. Reach out to the GoWest Solutions Team for more information or to receive your Stablecoin Starter Kit.

Posted in GoWest Solutions, Top Headlines.