The largest banks in the United States are working on a tokenized deposit network that is intended to launch in the first half of next year through their co-owned payment network company Clearing House, according to a report in The Wall Street Journal. Specific banks involved in the project include JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America. The move is seen as a response from the banking industry over the growth in stablecoins in recent years, which are the specific kind of dollar-pegged crypto token that has been at the center of a feud between the crypto and banking industries regarding specific language that will be included in the crypto regulatory bill making its way through the Senate, known as the Clarity Act.
The technical specifics of the tokenized deposit network remain unclear at this time. However, unlike stablecoins, which are issued by private companies, these tokenized deposits would be issued directly by banks as digital versions of customer deposits, meaning they would generally remain within the traditional banking regulatory framework and retain the associated consumer protections.
“Tokenization” is one of the latest buzzwords related to crypto and blockchain technology to be tossed around quite a bit, so it’s not exactly clear if these deposits will be operating on open networks or more permissioned systems, the latter of which tend to be more commonly seen when these sorts of large financial institutions are involved. This is indeed the case with the New York Stock Exchange’s upcoming tokenization platform. JPMorgan already operates its own private blockchain-based payments infrastructure through Kinexys, but the bank has also begun experimenting with public blockchain networks, launching a deposit token called JPM Coin on Coinbase’s Base blockchain.
The Return of “Blockchain, Not Bitcoin?”
Of course, the traditional banking industry has a long history of consortium blockchain systems that haven’t fared well. For example, early Bitcoin developer Mike Hearn infamously joined banking consortium blockchain company R3 in 2015, around the same time he declared Bitcoin a failed experiment with the price at roughly $430 (it’s trading at $60,528 at the time of this writing). As it turned out, Bitcoin’s decentralization has proven to be not all that necessary for regulated financial activities where more centralized systems can operate much more efficiently. R3 itself no longer operates as a consortium of banks, but it claimed to have roughly $10 billion in tokenized real-world assets (RWAs) on its Corda networks as of February 2025.
At the same time, Ethereum and other crypto networks with more expressive scripting languages than Bitcoin were able to gain traction through use cases such as token issuance and decentralized finance (DeFi). Developers were effectively able to build any sort of financial application they wanted on these public blockchain networks, but what they built mostly revolved around centrally-issued, dollar-pegged tokens we know as stablecoins. While these stablecoins were originally able to operate almost as freely as bitcoin itself, they include backdoors for freezing and blacklisting, as seen in the recent case with $344 million in the Tether-issued stablecoin USDT being frozen as a result of being tied to the Iranian regime.
Ever since @kyletorpey said that “Ethereum/DeFi not Bitcoin” was this cycle’s “Blockchain not Bitcoin” I can’t get the analogy out of my head. A lot there.
— Joe Weisenthal (@TheStalwart) May 23, 2021
As activity on these crypto networks has centralized around stablecoins, the real differences between crypto and the traditional banking system have become increasingly blurred. On top of that, the blockchain networks themselves are increasingly operating as extensions of centralized financial institutions, whether it be via longtime crypto exchange Coinbase’s Base or stablecoin issuer Circle’s Arc.
In terms of widespread adoption of this technology, it’s clear that banks and crypto companies are both merging towards a similar point on the spectrum of decentralization that will likely be far removed from what creator Satoshi Nakamoto originally enabled with the launch of Bitcoin in 2009. The specific technical structure of these systems going forward will likely depend on the final language included in the Clarity Act, in addition to any other future potential regulation applied to the fintech industry. The Bitcoin network itself is still mostly resistant to this sort of centralization creep and regulatory capture; however, there are also growing concerns there regarding the concentration of the bitcoin supply in large custodians who hold coins on behalf of others, most notably Michael Saylor’s bitcoin treasury company Strategy.