In March Custodia Bank announced a collaboration for tokenized deposits with Vantage Bank. Now the two banks are working together to support cross border payments using Custodia’s Avit token on a permissionless blockchain. Previous transactions were on Ethereum.

Vantage Bank’s customer, courier firm DX Xpress, used the programmable dollar tokens for a payment between Mexico and the United States. A common real world use case often cited for digital currencies is conditional payments, such as paying for ecommerce purchases on delivery. Hence, if the goods don’t arrive, the buyer isn’t out of pocket. DX Xpress is using it for this purpose and to pay drivers.

“We see the capability to offer integrated, programmable U.S. dollar payments through our platform to speed up cash conversion cycles allowing for payments to be initiated via a smart contract at delivery and ultimately paying drivers for a completed route within the hour,” said Antonio Bazán, President and CEO of DX Xpress.

Vantage views it as a way to offer faster, cheaper cross border payments and to provide foreign exchange services.

While some refer to the token as a stablecoin, legally it is not. Avit is backed by bank deposits and issued by a bank, so it is subject to conventional bank regulations, including the Bank Secrecy Act and anti money laundering compliance. Additionally, holders of the token have rights and protections under the Uniform Commercial Code, something that stablecoin holders lack.

Meanwhile, Custodia Bank has been battling to get a Federal Reserve master account for years, with no luck so far. That’s despite the Kansas City Fed saying the bank was technically eligible in 2022, but was subject to approvals needed by banks engaging in blockchain and crypto. Now Custodia is looking to partner with other banks who are interested in deploying tokenized deposits.