UAE Tokenized Deposits Are Moving Faster Than Stablecoins

The UAE’s race to build the next generation of digital money may be developing differently from what the stablecoin boom initially suggested.

On Tuesday, HSBC and Ant International completed real-time tokenized deposit transactions involving the UAE, including dirham-denominated transfers within the country and US dollar transfers initiated from the UAE to Hong Kong and Singapore. The transactions make Ant International the first Middle East client to use HSBC’s Tokenized Deposit Service.

Taken alone, that would be another blockchain banking pilot. Taken alongside what has happened across the UAE banking sector over the past few months, it points to something more significant.

HSBC launched its Tokenized Deposit Service in the UAE in June. Citi brought Citi Token Services — its own tokenized-deposit infrastructure — into the UAE in September. First Abu Dhabi Bank has participated in live transactions through Swift’s new blockchain ledger for tokenized deposits. Mashreq has also completed a live cross-border transaction through the same emerging infrastructure.

Meanwhile, regulated AED stablecoins continue to expand, with licensed issuers, an AED 110 million DDSC transaction and the first retail point-of-sale pilots already completed.

Both models are advancing.

But for institutional money, tokenized deposits may be moving through the UAE banking system faster than stablecoins because they do not need to build a new financial system around the token. They digitize money, relationships and infrastructure that banks already have.

That distinction could become one of the most important themes in the next phase of the UAE’s digital-money market.

HSBC Moves AED Bank Deposits Onto Blockchain Rails

HSBC introduced its Tokenized Deposit Service in the UAE on June 22, connecting the dirham to a network already spanning major financial centers.

The model is relatively straightforward. A corporate client designates deposits held at HSBC, which are represented one-for-one as digital tokens on the bank’s private blockchain. Those tokenized deposits can then be transferred between participating HSBC locations and corporate wallets around the clock.

The important word is deposit.

This is not a new privately issued currency. It is not a stablecoin backed by reserves held somewhere else. And it is not a CBDC issued by the Central Bank.

The customer still has money with HSBC. The token is a digital representation of that bank deposit.

HSBC says eligible corporate and institutional clients in the UAE can use the infrastructure for domestic and cross-border transfers, with 24/7 availability and integration into existing treasury operations.

Ant International has now moved that infrastructure from availability to actual use.

Through its WhaleRTP blockchain-based treasury platform, Ant completed real-time AED tokenized-deposit transactions inside the UAE as well as USD-denominated transactions initiated from the UAE to international markets including Hong Kong and Singapore.

WhaleRTP is already supported by more than 20 global banks and works across more than 17 currencies, giving the UAE connection significance beyond a bilateral proof of concept. Ant International also says it intends to establish a global treasury hub in the Middle East.

The story, therefore, is not simply that HSBC has put deposits on blockchain.

It is that the UAE has been connected to an existing global corporate liquidity network.

HSBC Is Not Alone

That is where the argument becomes more substantive.

On September 28, Citi announced that Citi Token Services had gone live in the UAE, alongside Japan, taking the service to seven markets.

Citi Token Services uses a private permissioned blockchain to tokenize deposits held within Citi’s banking network. In the UAE, the service initially supports US dollar and euro transactions and allows corporate and institutional clients to move liquidity between enabled Citi locations without conventional cut-off times or holiday restrictions.

Citi says the platform already processes billions of dollars in transactions globally. Earlier this year, the bank told investors that hundreds of clients were moving close to $1 billion a day through its tokenized-deposit capabilities before the UAE expansion.

This matters because HSBC and Citi are not experimental fintech companies seeking banking access.

They are two of the largest transaction banks in the world bringing tokenized commercial-bank money directly into their existing treasury networks.

And another layer is forming between banks.

Swift announced in July that 17 banks across six continents would begin live testing of its blockchain ledger for tokenized deposits. The group includes HSBC, Citi, Standard Chartered, First Abu Dhabi Bank and Mashreq.

FAB subsequently participated with Citi in one of the first live Middle East transactions on the ledger, while HSBC and Standard Chartered completed the first live bank-to-bank tokenized-deposit transaction through the infrastructure in August.

This is beginning to address what had been one of the biggest weaknesses of tokenized deposits: interoperability.

A deposit token operating only inside HSBC is useful for HSBC clients. A Citi token operating only inside Citi serves the same closed-network purpose.

If those deposits can increasingly interact across shared infrastructure such as Swift, the proposition changes.

Tokenized deposits begin to resemble a new digital layer for commercial bank money itself.

Why UAE Tokenized Deposits May Have a Shorter Institutional Path

Stablecoins and tokenized deposits can perform some similar functions, but they start from very different places.

A stablecoin requires an issuer, regulatory authorization, reserves, issuance and redemption mechanisms, custody arrangements, wallet infrastructure, distribution and eventually enough counterparties willing to accept the token.

The UAE has deliberately built that framework.

Under the Central Bank’s Payment Token Services Regulation, payment-token issuers operate within a dedicated regulatory regime covering issuance, conversion, custody and transfer. Licensed issuers face capital requirements and strict rules governing reserves, including segregation of backing assets.

Tokenized deposits start somewhere else.

The deposit already exists.

The customer already has a bank account. The bank has already completed onboarding and compliance. Corporate treasury systems already connect to the bank. Liquidity already sits on its balance sheet.

Tokenization changes how that deposit can move.

That creates an important asymmetry.

Stablecoins have to build distribution. Banks already have it.

For institutional treasury departments, the decision may therefore not be whether they want to “adopt crypto” or hold a new digital asset. It may simply be whether they want their existing bank deposits to move 24/7, become programmable and interact with tokenized financial infrastructure.

That is a materially easier proposition.

The Bank for International Settlements has previously highlighted another structural distinction: tokenized deposits can preserve the relationship between commercial bank money and central bank settlement while introducing programmability and composability. Stablecoins, particularly those circulating as bearer instruments, can create different questions around the “singleness of money.”

Stablecoins Are Not Losing — They Are Building Something Different

None of this means the UAE stablecoin market is failing to develop.

Quite the opposite.

Unlock Blockchain recently reported that five AED-backed stablecoin initiatives are progressing within the Central Bank ecosystem, including four bank-linked initiatives and one non-bank participant.

In September, Network International moved DDSC into a different environment through the UAE’s first in-store AED stablecoin pilot, allowing payments at selected merchants using existing point-of-sale infrastructure.

AE Coin has also been expanding through wallets, regulated crypto-to-dirham conversion and merchant acceptance, while Zand has been developing its own regulated AED-backed model.

So the comparison should not be reduced to which technology has produced more transactions.

The more meaningful question is which model has the shortest route into the financial use cases that matter.

For retail payments, stablecoins may have broader potential portability.

For public blockchain settlement, DeFi, tokenized assets, cross-border FX and digital-asset ecosystems, stablecoins retain advantages that closed bank deposit networks cannot easily reproduce.

But for corporate treasury, liquidity management and institutional payments, tokenized deposits are beginning with an enormous structural advantage.

They already sit where corporate money sits.

The Stablecoin Thesis Is Changing

This development also builds on a question Unlock has been following for more than a year.

In September 2025, Unlockexamined whether deposit tokens could emerge alongside stablecoins as the UAE banking sector moved deeper into digital assets. By December, our analysis argued that UAE stablecoins would ultimately be judged less by retail adoption than by their ability to become institutional capital rails.

In February, that thesis went further: AED stablecoins make most economic sense when they can travel across borders, support FX conversion and interact with international settlement infrastructure rather than simply replicate the UAE’s already efficient domestic payment system.

HSBC and Citi now introduce another possibility.

What if banks can achieve part of that same institutional objective without issuing a separate stablecoin at all?

If a multinational can move its existing bank deposits between Dubai, Hong Kong, Singapore, London and New York in near real time, 24/7, the economic distinction between conventional commercial bank money and programmable digital money begins to narrow.

That does not eliminate the stablecoin use case.

It forces it to become clearer.

Public Money, Stablecoins and Bank Money Are Converging

The UAE may therefore be heading toward something more sophisticated than a winner-takes-all contest between stablecoins and banks.

Three digital-money layers are forming.

At the sovereign level sits the Digital Dirham, representing central bank money.

Alongside it sits regulated AED stablecoins, designed as transferable payment tokens capable of operating across digital networks.

And now commercial banks are bringing tokenized deposits onto blockchain rails while retaining deposits inside the regulated banking perimeter.

Unlock’s latest reporting on the Digital Dirham showed that these systems are already being developed alongside each other rather than as mutually exclusive alternatives. The Central Bank is progressing the Digital Dirham while simultaneously overseeing an expanding AED stablecoin ecosystem and broader digital-payment infrastructure.

The next competition may therefore be less about which form of money survives and more about where each form of digital money settles best.

Stablecoins may dominate where money needs to move openly across networks.

CBDCs may provide sovereign settlement and public-money infrastructure.

Tokenized deposits may dominate where corporations want programmability and 24/7 settlement without moving liquidity outside their banking relationships.

Banks May Be Tokenizing Before Stablecoins Can Disintermediate Them

This is perhaps the bigger lesson from HSBC’s transaction with Ant International.

Stablecoins were initially framed as a technology capable of bypassing banks.

Banks increasingly appear to have reached a different conclusion: rather than wait to be bypassed, they can put bank money on the same technological rails.

HSBC now has tokenized deposits operating across six markets. Citi has expanded its service to seven. Swift is building interoperability across 17 major banks. FAB and Mashreq are already participating in that architecture from the UAE.

The result is not decentralization of money in the crypto sense.

It is the tokenization of commercial banking itself.

Stablecoins still have advantages that tokenized deposits do not — particularly portability, public blockchain access and the ability to move beyond a single bank’s network. Their role in tokenized markets could ultimately become much larger as financial assets increasingly settle onchain.

But inside institutional finance, the UAE is beginning to reveal a different race.

Stablecoin issuers are building new networks around new digital representations of money.

Banks are making the money already sitting in corporate accounts programmable.

For corporate treasury, the second route may simply be faster.

And if HSBC, Citi, FAB, Mashreq and Swift are indications of where the market is heading, tokenized deposits may be reaching the institutional financial system before stablecoins have finished building the infrastructure required to compete with it.