The news: US banks are aggressively defending their role in payments and deposits as stablecoins and crypto firms become more competitive. JPMorgan, Citigroup, Bank of America (BofA), Wells Fargo, and other major banks are planning a shared tokenized deposit network, operated through a payment network company called the Clearing House that these banks co-own, per The Wall Street Journal. This will allow bank deposits to move on blockchain infrastructure with instant, 24/7 settlements.

Why this matters: One of banks’ biggest issues is deposit retention. Against this backdrop, they also view stablecoins as a threat, because they could pull cash from bank accounts and into crypto ecosystems. However, their popularity among retail consumers is still quite limited.

By creating tokenized deposits—traditional bank deposits represented as digital tokens—banks can offer many of the same benefits as stablecoins while keeping customer funds in the banking system. This helps protect a core source of bank funding and preserves banks' role in payments, treasury management, and liquidity services.

This move also shows that banks increasingly consider tokenization necessary infrastructure. Indeed, many prefer tokenized deposits to stablecoins, because they fit more naturally into existing accounting standards and risk frameworks. 

Zoom out: Big banks' push into tokenized deposits can also be viewed as a response to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act and the broader regulatory normalization of stablecoins. While banks have publicly criticized the legislation, it nonetheless paves the way for wider stablecoin adoption. 

In response, banks are positioning tokenized deposits as a regulated alternative to stablecoins to preserve their central role in payments, treasury management, and deposit gathering.

Implications for banks: The largest banks have opted to collaborate rather than rely solely on proprietary networks. That suggests the industry sees interoperability and scale as critical to competing with stablecoins, for which the value increases as more participants join the same network. By creating shared rails, banks can accelerate adoption across the industry and present a unified alternative to crypto-native payment ecosystems.

If successful, the network could allow regional and community banks to offer tokenized deposits without developing their own blockchain platforms.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.