What backs a token

A token names a denomination and a contract. It does not say what stands behind it — that is the issuer's reserve, and a bank may back instruments with cash, with bonds, or with a stablecoin it holds. The choice changes the economics and the regulation, and it changes one design decision inside the token.

The constraint first. A token's denomination is inside the preimage of the issuer's signature, so it cannot change. An instrument therefore cannot "accrue" by growing: an interest-bearing token is not a rebasing balance, it is a fixed face value plus interest that accrues beside it and is paid as new instruments. Everything below follows from that.

Three kinds of reserve

Reserve	What the token is a claim on	What it does to the design
Cash at the issuer	A deposit, or central-bank money where the bank has it	Stable face value, no yield. The simplest case and the one the sandbox models.
Bonds	A pool of fixed-income assets; coupons are the funding source	Face value fixed, yield accrues to holders. Requires maturities, duration and a policy for what happens if the pool is sold at a loss.
A stablecoin	Whatever backs that stablecoin	One more layer: the token is a claim on a claim. Fine if the issuer accepts the counterparty risk knowingly, and it should be stated as a two-step chain, not hidden as "cash".

Where the interest goes

Three models, in increasing complexity. Only the first two are compatible with a fixed signed denomination without re-issuance.

1  holder of record       coupons accrue in the record; paid at redemption as face + accrued
2  periodic distribution  interest is issued as new tokens on a schedule (monthly, quarterly)
3  rebasing               the balance grows in place — requires re-signing, so it is not this design

Model 2 is what a bank usually wants because holders can see it: on the first of the month, each holder with a bond-backed instrument is issued small tokens equal to its share of the coupon. It costs instrument slots, so it suits float-sized balances and not thousands of tiny accounts.

Why rebasing does not fit here

The signature is over the denomination. Changing the amount invalidates the instrument; the honest version is to retire it and issue a new one, which is re-issuance by another name.
The card holds a fixed 64-byte image, and the vault keeps the master copy in a slot. A rebasing token would have to be rewritten on every accrual, on every chip.
Reconciliation assumes the chip is the authority. A value that changes without the chip changing breaks the one comparison that makes the physical record useful.

Anchors, and what each does to the token

A token's denomination is a unit as well as an amount. Choose the unit deliberately and three very different instruments come out of the same machinery:

Anchor	Unit on the token	Yield	What moves
Stablecoin	Currency, matching the stablecoin's unit	yes — accrued in the record, paid at cash-out	Nothing, as long as the stablecoin holds its peg
Treasury bonds	Currency	yes — coupon pass-through or a promised rate	Duration: the pool can be worth less than face at any instant
Gold	Mass — grams or troy ounces, not currency	no	The currency price of the metal, which is the point

Two consequences worth stating plainly:

An interest-bearing instrument pays at the end, not along the way. Cash-out settles face plus the accrued amount, computed from the reserve ledger — the token itself never changed. That is model 1 above, and it is the only way yield and a fixed signature coexist.
A gold-anchored token is denominated in mass. "10 grams" is a fixed, signable denomination; its currency value is a quote at the moment of redemption, not a property of the token. Denominate it in dollars instead and the issuer is writing a price guarantee it cannot sign into the instrument.

The choice also decides the holder's experience at a till. A stablecoin- or bond-anchored instrument spends at face, like a note. A gold-anchored one needs a price to spend — which means either the till quotes it, or it is presented for redemption rather than payment. Both are workable; only one is a cash note.

A wider set of anchors, and four problems that come with them

Metals, bonds, currencies, equities and funds all fit the same pattern — a unit, a quantity, a reserve ledger — but they do not behave alike, and four difficulties appear as soon as the anchor is not cash:

Anchor	Unit	Income	The difficulty
Currencies	Currency	Interest, if the issuer pays it	Trivial. This is the case the sandbox models.
Metals	Mass	None, and storage costs	Price risk in currency terms; assay and custody to prove the metal exists.
Bonds	Currency, plus a duration	Coupons	Value moves with rates; a face-value redemption needs a buffer.
Equities	Shares	Dividends	Corporate actions: splits and mergers change what a "share" is.
Funds / ETFs	Units of a fund	Distributions	Same as equities, plus creation/redemption mechanics and a manager.

Problem 1 — corporate actions

A two-for-one split doubles the share count. A token denominated in one share would then represent half of what it did yesterday, and its fixed denomination cannot be edited. The workable handling is the same as interest: keep the token fixed, record the action in the reserve ledger, and either issue the adjustment as new instruments or express it as a ratio applied at redemption. Mergers and takeovers are worse — the underlying ceases to exist, so the reserve must be redefined and holders told.

Problem 2 — income arriving irregularly

Coupons are scheduled; dividends are announced; fund distributions vary. An accrual plan that works for a bond (a known rate on known dates) does not work for an equity whose payment is declared quarterly with no guarantee. The schedule has to be data, not arithmetic in code.

Problem 3 — settlement timing

Equities and funds settle a day or more after trade. A token that redeems instantly against a reserve that settles tomorrow is a funding gap, and it widens exactly when the market is stressed. Either redemption is delayed by the settlement cycle, or the issuer funds the gap and should price it.

Problem 4 — a bearer claim on a security

This is the one that decides whether equity-anchored tokens are possible at all, in a given jurisdiction. A bearer instrument pays whoever presents it. Securities generally require a register of holders, transfer restrictions, and knowledge of who the holder is. Those two things pull in opposite directions, and no amount of engineering resolves it — it is a legal question that must be answered before the first token is issued.

Three positions a bank can take, in order of how much they change the design:

Tracked only — an equity-anchored token may exist but never be bearer: the record always names the holder, transfers require the issuer, and no offline movement is allowed. The ESCROW_ONLY contract already expresses this.
Pooled exposure, not ownership — the token is a claim on a fund that holds the securities, so the holder of the token is not a shareholder of record. Cleaner legally, and one step further from the asset.
Outright bearer — a physically transferable claim on a security. Where this is permitted at all, it is under a specific regime, and the instrument usually has to be certificated rather than chip-based.

Who writes the contract

The bank contracts the value and CoinCard anchors it. A token can say "one hundred shares of this line", or "the currency value of one hundred shares on the redemption date", and the bank is the party that promise belongs to. CoinCard supplies the machinery that makes the promise signable, storable, transferable and checkable — not the promise itself.

That division has a precise technical consequence: the denomination has to be able to carry a quantity in a named unit, referencing a named thing, and all of it has to be inside the signed preimage. Today's canonical string carries an amount and a currency, which expresses cash and nothing else:

v1  COINCARD-ISSUE-V1|tokenId|amountCents|currency|contract
    → "1,000 cents of cUSD, peer-to-peer"

v2  COINCARD-ISSUE-V2|tokenId|quantity|unit|reference|terms
    → "100 shares of ISIN GB00B…, escrow-only, tracked"
    → "50000 cents of USD, p2p"
    → "10 grams of XAU, p2p"

unit is the thing being counted (share, gram, cent), reference is which one (an ISIN, a metal code, a currency), and terms is the transfer condition the bank attaches. Because all four are signed together, a token cannot be re-presented as a different quantity of a different thing.

The sandbox signs v1 only. v2 is specified here because an equity- or metal-anchored token cannot be honest without it, and it is a contained change: a wider canonical string, two extra fields on the token record, and the signer and validator taught to carry them.

Why the reference belongs in the signature

A quantity without a reference means nothing. "100 shares" of what? If the reference sits outside the signature, the instrument can be re-pointed at another line after issuance.
Corporate actions need a stable target. When the underlying splits, the reference lets the issuer say which instrument the adjustment applies to, and holders can check it themselves.
Redemption needs to know what is being delivered. Cash, shares or metal at maturity is a different settlement instruction in each case, and the token should say which.

What the bank still owns, and CoinCard does not

Obligation	Whose it is
The promise the token represents	the bank
Holding the reserve, and proving it exists	the bank
Whether holders may receive it at all (securities law, transfer restrictions)	the bank
Corporate actions on the underlying	the bank
Making a token unforgeable, storable, transferable and verifiable	CoinCard
Recording who holds it, and refusing a spent copy	CoinCard
Keeping the physical anchor — the chip that holds the master copy	CoinCard

That is a clean split, and it is the one worth putting in front of a bank: they are not adopting a currency, they are adopting an instrument format that happens to be auditable. The instrument is theirs; the guarantee that it cannot be copied or double-spent is ours.

Settlement: deliver the metal, or pay the spot

For a metal-anchored instrument the contract has to say what happens at the end, and there are two honest answers. Which one is chosen is the bank's wording; what matters technically is that the choice is in the token, because a holder who can switch between them after the price moves is holding a free option against the issuer.

terms  DELIVER_ITEM     the holder receives the metal: bars, coins, a vault transfer
       SPOT_VALUE       the holder receives the currency value at a named price fixing
       HOLDER_CHOICE    either, at redemption, with a fee that prices the delivery option

	Delivery	Spot value
What the holder gets	grams, in a form and place named in the contract	currency, at a stated price and time
What the issuer needs	custody, assay, logistics, an insurance chain	a price source, a fixing time, and a currency
The argument it invites	fineness, form, delivery cost, jurisdiction	which price, fixed when, and by whom
Spends at a till	no	no, unless quoted

Two details that decide whether either version is trustworthy:

The price source must be independent and named. "Spot" is not a number; it is a fixing — LBMA, a central bank reference, an exchange close — at a stated time on a stated date. If the issuer chooses the price after the fact, the contract is discretionary and should be described as such.
Delivery has to be real. A contract promising bars needs a custodian, assay certificates and an allocation method. Otherwise it is the spot contract with extra words, which is a misrepresentation rather than a feature.

Neither settlement type belongs in the retail flow. A retail token is a contract for cash and spends at face; a metal token is presented for redemption, and the till does not care what the metal is worth that morning.

Two classes of instrument

Retail tokens are contracts for cash. They are denominated in a currency, they spend at face, and they need nothing beyond what the sandbox already signs. The whole retail path — till, float, change, purse, sweep, offline card — is built on that one assumption, and it should stay that way.

	Retail	Investment
What it is a claim on	Cash, in a named currency	Shares, bonds, metal, a fund
Denomination	Amount + currency (v1)	Quantity + unit + reference (v2)
Spends at a till	yes, at face	no — presented for redemption, or quoted
Transfer	P2P, escrow or redeem-only	Tracked only; the record always names the holder
Why	Cash has no register of holders	Securities generally require one

The distinction is not cosmetic: it decides whether a token may move without asking anybody. A retail note can be handed over because cash can. An instrument anchored in a security cannot, because the law that governs it wants to know who holds it — which is precisely what the ESCROW_ONLY contract already enforces.

Keeping them apart also keeps the retail path simple. Every feature a shop needs — float, change, purse, sweep — works on a fixed cash denomination and would have to be rewritten for something whose value moves. A bank that wants both runs two token classes from one account structure, not one token class with two behaviours.

What a bank would have to decide

Decision	Why it cannot be deferred
Is the token a claim on a named pool, or on the bank generally?	A named pool allows a run on that pool; a general claim is a deposit and carries deposit-insurance and resolution questions.
Who takes the duration risk?	If instruments are redeemable at face on demand and the pool is long-dated, the bank is funding liquidity risk with someone else's certainty.
Is the yield promised or passed through?	A promised rate is a liability with capital behind it; a pass-through is a service.
What happens on a loss?	Bonds can fall. A token that always redeems at face needs a buffer, and the buffer is a capital decision.
Where does it sit in regulation?	Bond-backed instruments are plausibly securities; stablecoin-backed instruments are plausibly e-money. Both change who may hold them and how they are sold.

The honest framing for a bank. A CoinCard instrument is a bearer claim, and what makes it worth its face is the reserve the issuer holds and the record that names the holder. Backing it with bonds adds yield and adds duration, credit and disclosure obligations. Backing it with a stablecoin adds a counterparty you do not control. Neither is free, and neither should be described to a holder as "the same as cash".

What exists in the sandbox today

A currency and a contract on every instrument — built: cUSD, with P2P, ESCROW_ONLY or REDEEM_ONLY.
No reserve reference — not built. Nothing on a token points at a pool, so "bond-backed" cannot yet be expressed or audited.
No accrual — not built. Interest would be a scheduled issuance job, which the vault signer could run, but there is no schedule, rate or reserve ledger.
The mechanism it would need — a reserve_id on the instrument, a reserve ledger recorded by the issuer, and a periodic issuance that the vault signs.

Sandbox deployment, USD, English. Test values, not money. This page describes a design space, not a product offering; the regulatory position of any reserve-backed instrument is a matter for the issuing institution and its counsel.