Participate, the Loan Sales Ecosystem for financial institutions, today announced it has completed the world’s first loan participation or syndication principal and interest payment between financial institutions using tokenized deposits.
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The payment between two Texas banks, Vantage Bank and Rio Bank, moved through the Hazel Network, the tokenized-deposit and stablecoin platform developed by Vantage Bank and Custodia.
In less than three minutes Vantage Bank posted a loan payment in Participate where principal and interest were split to a participant and transmitted, as tokenized deposits, into the buying institution’s digital wallet. Loan balances and payment notices updated automatically as the funds moved. Participation payments have traditionally relied on wires, spreadsheets, and emailed notices, with reconciliation that can take days.
“Banks will adopt tokenized deposits when they make routine work better, and few jobs are more routine than paying loan participants,” said Matt Johnner, President & Co-founder of Participate. “This payment showed that the money and the loan records can move together, inside the workflows institutions already use. Participation and Syndication loan payments give financial institutions a practical place to start the sensible utilization of digital assets. Innovation is not just for the big banks or big tech players. Together with Hazel, Vantage and Custodia we have proven community oriented financial institutions can lead, not be led.”
Three layers. One connected workflow.
The payment brought three layers together through the Hazel Network:
• Participate — the orchestration and automation layer, coordinating payment allocations, instructions, automated notices, and loan-balance updates.
• Vantage Bank — the banking layer that provides cash management and APIs.
• Custodia — the blockchain and tokenized deposit layer, handling wallets, wallet-level compliance controls, blockchain operations and automated reconciliation monitoring between the deposit ledger and blockchain.
The workflow is designed to reduce manual coordination between loan sale servicing, notices, and payment processing. The selling institution handles remittance and servicing updates in a single process, and the buying institution receives principal and interest payments in synchronous timing with balances and automated notices.
Faster payments. Banks at the center.
Speed is only part of the result. Both institutions get a clearer view of the funds and the underlying loan activity. And banks competing with nonbank payment providers gain a practical way to modernize payments while keeping financial institutions at the center of the transaction.
“This payment helps prove value quickly while giving banks a future-proof path to using on-chain technology,” said Shawn Main, Executive Vice President and Chief Business Architect Officer at Vantage Bank. “We have more great things we can do with tokenized deposits and smart contracts in the future.”
"This milestone bank-to-bank transaction demonstrates how community banks can start using tokenized deposits, which we believe will eat stablecoins' lunch by automating back-office processes and freeing up capital currently tied up in bank-to-bank settlement delays," said Caitlin Long, Founder and CEO of Custodia.
What’s next.
The payment is the first completed under the collaboration Participate, Vantage Bank, and Custodia announced in April 2026, which gives Hazel Network access to Participate’s network of more than 750 banks. Participate will begin offering access to loan sale payment automation using tokenized deposits and Fedwire automation for participation and syndication payments to all of Participate's 750 network banks.