Key takeaways
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US banks are prioritizing tokenized variations of acquainted merchandise, together with deposits, funds and custody, moderately than launching new crypto-native property.
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Most onchain financial institution exercise is going down in wholesale funds, settlement and infrastructure, largely out of public view.
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Regulators are more and more permitting crypto-related banking actions, however solely inside tightly supervised and risk-managed frameworks.
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Public blockchains reminiscent of Ethereum are being examined by main banks, however solely by means of managed and compliant product constructions.
US banks aren’t racing to subject speculative crypto merchandise. As an alternative, they’re methodically rebuilding core monetary plumbing, together with funds, deposits, custody and fund administration, so these providers can function on distributed ledgers. The work is incremental, technical and infrequently invisible to retail clients, however it’s already reshaping how massive establishments take into consideration cash motion and settlement.
Moderately than embracing unregulated crypto property, banks are specializing in tokenization, the method of representing conventional monetary claims, reminiscent of deposits or fund shares, as digital tokens recorded on a ledger. These tokens are designed to maneuver with embedded guidelines, automated settlement, real-time reconciliation and diminished counterparty threat whereas remaining inside current regulatory frameworks.
Tokenized money: Deposits that transfer like software program
One of many clearest indicators of this shift is the rise of tokenized deposits, typically described as “deposit tokens.” These aren’t stablecoins issued by nonbanks. As an alternative, they’re digital representations of business financial institution deposits which are issued and redeemed by regulated banks.
JPMorgan has been among the many earliest movers. Its JPM Coin system, launched for institutional shoppers, is positioned as a deposit token that permits real-time, 24/7 transfers on blockchain-based rails. In keeping with JPMorgan, the system is used for peer-to-peer funds and settlement between accredited shoppers.
In 2024, JPMorgan rebranded its broader blockchain unit as Kinexys, framing it as a platform for funds, tokenized property and programmable liquidity moderately than as a standalone “crypto” initiative.
Citi has taken an identical path. In September 2023, the financial institution introduced Citi Token Providers, integrating tokenized deposits and good contracts into its institutional money administration and commerce finance choices. By October 2024, Citi stated its tokenized money service had moved from pilot to dwell manufacturing, processing multimillion-dollar transactions for institutional shoppers.
These initiatives aren’t occurring in isolation. The New York Fed’s New York Innovation Middle (NYIC) has printed particulars of a regulated Legal responsibility Community (RLN) proof of idea involving banks, together with BNY Mellon, Citi, HSBC, PNC, TD Financial institution, Truist, U.S. Financial institution and Wells Fargo, in addition to Mastercard.
The undertaking simulated interbank funds utilizing tokenized industrial financial institution deposits alongside a theoretical wholesale central financial institution digital forex (CBDC) illustration, all inside a managed take a look at setting.
Do you know? Past money and funds, main US banks are actively contemplating the tokenization of real-world asset lessons reminiscent of personal credit score and industrial actual property. This might unlock onchain liquidity and fractional possession, an space the place conventional finance could acquire an edge over typical crypto-native fashions.
Custody and safekeeping: Constructing institutional-grade controls
For any onchain system to work at scale, property should be held and transferred underneath sturdy custody and governance requirements. US banks have been steadily constructing this layer.
BNY Mellon introduced in October 2022 that its Digital Asset Custody platform was dwell within the US, permitting choose institutional shoppers to carry and switch Bitcoin (BTC) and Ether (ETH). The financial institution positioned the service as an extension of its conventional safekeeping position, tailored for digital property.
Regulators have been clarifying what’s permitted. The Workplace of the Comptroller of the Forex (OCC), in Interpretive Letter 1170, said that nationwide banks could present cryptocurrency custody providers for patrons. The US Federal Reserve has additionally weighed in, publishing a 2025 paper on crypto-asset safekeeping by banking organizations that outlines expectations round threat administration, inner controls and operational resilience.
On the similar time, regulators have emphasised warning. In January 2023, the Federal Reserve, Federal Deposit Insurance coverage Company and OCC issued a joint assertion warning banks about dangers related to crypto-asset actions and relationships with crypto-sector corporations.
Tokenized funds and collateral transfer onto public blockchains
Past funds and custody, banks are additionally experimenting with the tokenization of conventional funding merchandise.
In December 2025, J.P. Morgan Asset Administration introduced the launch of the My OnChain Internet Yield Fund (MONY), its first tokenized cash market fund. The agency stated the fund’s shares are issued as tokens on the general public Ethereum blockchain and that the product is powered by Kinexys Digital Belongings.
Reportedly, JPMorgan seeded the fund with $100 million and described it as a non-public, tokenized illustration of a standard cash market fund moderately than a crypto-native yield product.
This step is important as a result of it hyperlinks tokenized money and tokenized yield-bearing devices inside acquainted regulatory constructions, illustrating how conventional asset managers are testing public blockchains with out abandoning established compliance fashions.
Do you know? Some US banks and market contributors are exploring tokenization’s position in preserving conventional buying and selling income by integrating digital asset buying and selling and brokerage infrastructure straight into financial institution programs. This method permits them to maintain execution, spreads and post-trade providers in-house at the same time as tokenized markets develop.
Regulation: Permitted, however intently supervised
The regulatory setting has been evolving alongside these pilots. In March 2025, the OCC clarified that nationwide banks could have interaction in sure crypto-related actions, together with custody and a few stablecoin and cost features, and rescinded earlier steering that required banks to hunt supervisory non-objection earlier than continuing.
The OCC has additionally issued a sequence of interpretive letters addressing associated points, together with banks holding deposits backing stablecoins (IL 1172) and utilizing distributed ledger networks and stablecoins for funds (IL 1174), alongside examination steering explaining how supervisors will overview such actions.
Taken collectively, these developments present a banking sector making ready for an onchain future in a cautious means by adapting current merchandise, embedding them in supervised environments and testing new infrastructure lengthy earlier than it reaches the mainstream.
