The digital asset market continues to evolve, and a new instrument is emerging that could radically transform corporate finance and interbank settlements. This refers to tokenized deposits — a hybrid technology that combines the reliability of a traditional bank deposit with the flexibility and speed of blockchain. While stablecoins have already gained popularity in retail and DeFi, tokenized deposits target the institutional sector, offering a fundamentally different level of security and regulation.
What is a tokenized deposit?
A tokenized deposit is a digital token issued by a bank, representing a liability to the client for their bank deposit. Essentially, it is a digital receipt for a deposit that exists on a distributed ledger. The key difference from stablecoins is that the deposit itself physically remains on the bank's balance sheet, subject to standard insurance systems and regulatory oversight. Only the method of transfer changes: instead of slow correspondent accounts and fixed banking hours, the token moves between parties instantly and around the clock, with settlement recorded automatically. A prominent example is JPM Coin from JPMorgan, which already operates on Coinbase's L2 solution Base but remains accessible only to institutional clients.
How does it work, and what is the key difference from stablecoins?
The process consists of three steps: issuance, transfer, and redemption. The bank accepts a deposit, creates an equivalent number of tokens on a permissioned blockchain network, and the client can transfer them directly to a counterparty without intermediaries. The main advantage is programmability. Using smart contracts, conditions can be embedded into the token under which the transfer will occur automatically — for example, after confirmation of goods delivery or upon reaching a certain liquidity threshold.
This is precisely where the divide with stablecoins lies. As economists from the Federal Reserve Bank of New York rightly noted, a stablecoin is "safe money" for settlements outside the banking system, accessible to any crypto wallet holder. A tokenized deposit, in contrast, remains within the traditional model, participates in lending, and is available only to verified clients of a specific bank. This closed nature provides regulatory protection but limits distribution. Analysts at Citi Institute predict that by 2030, the annual turnover of this segment could reach $100-140 trillion, indicating enormous interest from the business sector.
Practical scenarios and current market state
For the corporate sector, tokenized deposits open up three key scenarios. The first is instant settlements, as demonstrated by HSBC, which conducted the first cross-border transaction between Hong Kong and Singapore for Ant International in real time, eliminating the time zone effect. The second is using the token as collateral for transactions without withdrawing funds, which is being tested within Singapore's Project Guardian. The third is embedded payment logic that automates treasury operations.
To date, in addition to JPMorgan and HSBC, BNY has launched its services, and Goldman Sachs, together with BNY, has introduced tokenized money market funds. However, the main problem is the lack of a unified infrastructure. It is currently impossible to transfer a token from JPMorgan to HSBC directly. A solution could be a joint initiative by 17 major US banks, including JPMorgan Chase, Bank of America, and Citigroup, which are creating a shared network through The Clearing House, with a launch expected in the first half of 2027. In parallel, the Swift system has also joined the process, launching a pilot project for a shared blockchain ledger for cross-border payments involving 17 banks.
My expert opinion: Tokenized deposits are not just another "crypto product" but an evolution of money itself. They address the main pain point of corporate finance — the inefficiency and slowness of traditional settlements. However, the success of the technology will entirely depend on the banks' ability to agree on common standards and create an interoperable infrastructure. For now, we are witnessing an "arms race" among individual banks, which creates risks of market fragmentation. But once a common "hub" is built, we will witness explosive liquidity growth and a new wave of efficiency in the global economy.