For a long time, banks viewed blockchain primarily as a competing technology. Cryptocurrencies, stablecoins, and decentralized services created a parallel financial system in which money could move around the clock without relying on conventional banking infrastructure.
Now, financial institutions are attempting to incorporate the same advantages into their own products. One of the most prominent examples is tokenized deposits.
In essence, these are ordinary client funds held at a bank, with the corresponding rights additionally represented on a blockchain in the form of tokens. Such an instrument retains the legal nature of a bank deposit while enabling faster settlements and the automation of transactions.
Why banks have become interested in tokenization
Interest in tokenized deposits is developing alongside the RWA market — real-world assets whose ownership rights are recorded on a blockchain.
RWA (real-world assets) may include bonds, shares, real estate, precious metals, commodities, and bank deposits. Tokenization makes it possible to transfer their record-keeping into a digital environment, accelerate the transfer of rights, and link settlements to smart contracts.
According to DeFi Llama, the RWA market was valued at $26.7 billion in July 2026. The figure nearly doubled over the course of a year, while at the beginning of 2025 it stood at approximately $4 billion. The segment continued to grow even as the overall cryptocurrency market capitalization declined.
For banks, this is an important signal. Investors and companies are increasingly using digital instruments, while a significant share of liquidity is moving into stablecoins and other assets circulating outside the traditional banking system.
Since the beginning of 2025, the stablecoin market has grown from approximately $205 billion to $312 billion. Bank of America CEO Brian Moynihan suggested that, in the future, the outflow of funds from the US banking system into stablecoins could reach $6 trillion.
Tokenized deposits are becoming banks’ response to this threat. They allow financial institutions to offer clients the speed and programmability of blockchain without moving money outside the regulated financial system.
What a tokenized deposit is
A conventional deposit exists as an entry in a bank’s internal system. A tokenized deposit receives an additional digital representation—a token recorded on a distributed ledger.
At the same time, the token does not become an independent cryptocurrency. It confirms the holder’s right to a specific amount of money held at the bank. The financial institution remains liable to the client.
Such a token can be used for transfers, settlements between companies, the execution of transactions involving digital securities, or the automatic movement of funds.
Neither a stablecoin nor a central bank digital currency
At first glance, a tokenized deposit resembles a stablecoin: both instruments represent conventional money in digital form and can be used for settlement. However, their legal foundations differ.
A stablecoin is usually issued by a private company. Its reliability depends on the issuer’s reserves, how those reserves are held, and whether the token can be redeemed for fiat currency.
A tokenized deposit is issued by a bank. It represents the client’s claim against that financial institution and is governed primarily by banking regulations. The bank is required to comply with capital, liquidity, risk management, customer identification, and financial monitoring requirements.
Such a deposit differs from a CBDC (central bank digital currency) in terms of the issuer. A central bank digital currency is a direct liability of a country’s central bank, whereas a tokenized deposit remains a liability of a commercial bank.
Put simply, a stablecoin is backed by the reserves of a private company, a CBDC is backed by a central bank, and a tokenized deposit is backed by the balance sheet of a specific financial institution.
There are also differences in infrastructure. Stablecoins generally circulate on public networks available to a broad range of users. Tokenized deposits more commonly operate on private or permissioned blockchains, where participants undergo verification, and transactions are controlled by banks.
What banks gain from the new technology
The main purpose of tokenization is not simply to transfer a bank balance onto a blockchain. Banks want to transform money held in accounts into an asset usable within an automated digital infrastructure.
Tokenized deposits enable transactions to be conducted around the clock, including at night, on weekends, and on public holidays. This is particularly important for international businesses and digital asset markets, which do not stop operating when the banking day ends.
Another advantage is programmability. A payment can be linked to the fulfillment of predefined conditions, such as the delivery of goods, the registration of ownership rights, the redemption of a security, or confirmation that a transaction has been completed.
For banks, this is also a way to retain clients. Companies working with digital assets do not necessarily need to transfer their liquidity into stablecoins if similar functions are available through a regulated banking product.
What risks remain
Blockchain does not make bank money risk-free. A tokenized deposit still depends on the financial condition of the issuing bank. If the financial institution encounters problems, the digital form of the liability will not, by itself, protect the holder.
Technological risks are added to conventional banking risks. A failure in an internal system, an error in a smart contract, a vulnerability in a digital wallet, or incorrectly configured access rights may result in delays or the improper processing of a transaction.
Interoperability is another issue. Each bank may create its own blockchain network, token standard, and access rules. If the platforms cannot interact, transferring a digital deposit between banks may be difficult or require additional intermediaries.
Private infrastructure also raises questions about transparency. On a public blockchain, users can independently verify the issuance and movement of tokens. In a private banking network, the amount of information available depends on the bank’s own rules.
Which projects are already operating
JPM Coin and Kinexys
One of the best-known banking blockchain projects is JPM Coin, created by JPMorgan Chase. It is used for transfers and settlements between the bank’s institutional clients and represents funds held in bank accounts.
JPMorgan later consolidated its blockchain developments under the Kinexys brand. As of July 2026, solutions associated with the platform had processed more than $3 trillion in transactions.
The bank also tested deposit tokens within the infrastructure of Base, an Ethereum Layer 2 network. Mastercard and B2C2 participated in the experiments.
Multi-Token Network
Mastercard is developing its own Multi-Token Network infrastructure. It is designed for transactions involving tokenized money and other digital assets in a controlled environment.
The first tests involving bank deposits were conducted as early as 2024. The project’s primary audience consists of banks, financial companies, and corporate clients that require programmable settlements.
Regulated Liability Network
The Regulated Liability Network, or RLN, is a concept for a unified network for regulated digital liabilities. Within the network, commercial banks can issue their own deposit tokens and use them to settle transactions with other participants.
The first experiments took place in 2022–2023 with the participation of the Federal Reserve Bank of New York. In 2025, UK Finance launched a new phase of testing involving Barclays, HSBC, Citi, Mastercard, and other major companies.
The pilot is expected to run at least until the end of 2026. Its use cases include settlements in real estate transactions and in transactions where the transfer of money must occur simultaneously with the transfer of an asset.
Will tokenized deposits become the money of the future?
For now, tokenized deposits remain primarily an instrument for banks, large companies, and financial markets. For an ordinary client, the difference between such a product and a conventional bank account may be almost imperceptible.
The main changes are taking place within the financial infrastructure. Money is becoming available for round-the-clock settlements, the automatic execution of transactions, and interaction with tokenized assets.
For banks, this is an opportunity to preserve their central role in the movement of money. For businesses, it is a chance to accelerate settlements and reduce operating costs. For the financial market, it represents another step toward integrating traditional assets with blockchain systems.
However, the success of the technology will depend not on the mere use of blockchain, but on whether banks can agree on common standards, ensure platform interoperability, and convince clients of the reliability of the new model.