The banks that are embracing tokenized deposits

• Key insights: Banks are ramping up tokenized deposit initiatives.  
• What's at stake: Tokenized deposits are structured in a way that makes them an alternative to stablecoins.  
• Expert quote: "This is an enormous market. Having a lot of players involved is good, not bad." —Scott Shay, founder of N3XT

Banks are ramping up work on tokenized deposits, a digital asset option that provides a theoretically less risky alternative to stablecoins and other cryptocurrencies.

"Banks need to figure out how to get involved in digital assets or they could be in trouble," Scott Shay, founder of N3XT, told American Banker. N3XT issues NDD, a deposit token designed for cross-border transactions and other payments. The company, a Wyoming special purpose depository institution, is on a growing list of institutions that are issuing tokenized deposits individually or as part of a consortium.

Tokenized deposits are part digital asset/part traditional bank product. They're not new currency but a digital version of existing deposits held at a specific bank. Tokenized deposits are similar in some ways to stablecoins, but are more closely tied to the assets of a specific bank as a reserve. The appeal, according to Javelin Strategy & Research, is tokenized deposits offer the flexibility of digital money and always-on settlement but without new regulations. While the structure is designed to reduce risk, there are also liquidity and run risks given the speed of money movement.

Nearly two-thirds of banks are offering or are in some stage of developing tokenized deposits for corporate clients, according to research from American Banker as part of its Value of On-Chain Survey 2026. "This is an enormous market," Shay said. "Having a lot of players involved is good, not bad."

Here's a list of some recent tokenized deposit projects.

NDD

N3XT recently expanded access to its deposit token for businesses.

N3XT's deposit token, NDD, is backed by cash or very short duration U.S. Treasuries, with reserves matched to tokens, thereby ensuring a constant 1-to-1 backing. N3XT also maintains regulatory capital.

Businesses use NDD to send funds to blockchain addresses outside of the bank, manage liquidity between blockchain addresses, and settle cross-border payments in a few seconds. N3XT is particularly focused on building a network of smaller banks, which Shay argues may be at a disadvantage to the larger banks in pursuing tokenized deposits. "Embracing new tech is critical for midsize banks," Shay said, adding smaller banks are often locked into payment processing systems from the major bank technology vendors and can benefit by working through a consortium. "If they don't the mega banks will either devour them or allow them to languish."

NDD is structured to get around what N3XT calls the "walled garden" of bank tokenized deposits, according to Shay, adding NDD also enables nonbanks to hold and transact without opening a N3XT bank account.

Custodia Bank, Vantage Bank

Wyoming's Custodia Bank and Vantage Bank in Texas recently signed an agreement with Participate, a network of 600 banks that digitizes loan participations, to use the two banks' tokenized deposits in their loan transactions.

"That is an obvious use case," Custodia CEO Caitlin Long said during American Banker's On-chain Executive Summit. "It's bank to bank for loan participations. Why? If you're digitizing loan participations, why wait to have to go through a FedWire settlement when you can literally transfer the asset and the payment at the same time, and that's the most important aspect of this."

Vantage and Custodia launched their tokenized deposit last March. The banks issued tokens for a customer on the ethereum mainnet using the ERC-20 standard, the technical standard established by the crypto community for creating fungible assets on the ethereum blockchain.

Michael Nagle/Bloomberg

JPMorganChase

The bank makes its tokenized deposit product available through its Kinexys blockchain division. JPMorganChase recently made its JPM Coin deposit token, or JPMD, available for the bank's institutional clients on Base, a Coinbase-affiliated public blockchain. By offering an option beyond its private blockchain, JPMorganChase hopes to reach a wider audience by appealing to bank partners that want an alternative to stablecoins, which are dominated by cryptocurrency firms and other fintechs.

By letting its deposit token operate on a public blockchain, JPMorganChase has enabled a watershed for digital assets, according to payment analysts, adding that it establishes a beachhead from which deposit tokens can seek/explore more use cases across the financial services and payments ecosystem.

Cari

Eugene Ludwig, former comptroller of the currency during the Clinton administration, founded the Cari Network, which is designed for regional and community banks. Cari's five design partner banks are KeyCorp, Huntington Bancshares, Old National Bancorp, First Horizon and M&T Bank. Cari's goal is to attract banks to an interoperable network for tokenized deposits.

"For banks to continue meeting their customers' needs, they must remain at the forefront of innovation," Ludwig said in an earlier interview.

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Other bank consortia are similarly working on tokenized deposits, stablecoins and other digital assets. For instance, the BankChain Alliance, which launched last week, has 39 state bankers associations and several banks as members.

Angus Mordant/Bloomberg

Wells Fargo

Starting this fall, Wells Fargo will offer corporate and commercial clients the ability to move, program and settle funds at all times through tokenized deposits. Wells Fargo's program will initially cover U.S. dollars and British pounds for cross-border payments, with plans to expand it throughout the next year to more clients, countries, and currencies.

"Tokenized deposits will enable Wells Fargo's corporate and commercial clients to move money between accounts and across borders with greater ease and increased speed and builds on the strength of our established banking infrastructure," Wells Fargo Chief Financial Officer Mike Santomassimo said in a press release.

Benjamin Girette/Bloomberg

Citi

The bank's Citi Token Services lets its corporate clients use tokenized deposits to move money around the world at all hours, including on weekends. Citi, which is exploring several uses for tokenization, recently enabled clients to invest in tokenized shares of private companies on a blockchain.

The new service, which is called Digital Depositary Receipts, gives private companies an alternative way to raise money, as IPOs become more rare. Citi is also considering its stablecoin strategy. Citi is exploring stablecoin use cases including reserve management, converting stablecoins to traditional currency and a potential Citi stablecoin.

Bangkok-based The Siam Commercial Bank recently agreed to use Citi's 24/7 clearing and tokenized deposit service, the first financial institution to use the technology since the New York-based bank merged its blockchain and cross-border payment products. The deal is a sign that the banking industry is looking past individual tokenized deposit platforms and toward interoperability as pressure mounts from crypto firms.

"While widespread adoption still lies ahead, attention is increasingly focused on interoperability, liquidity management, operating model transformation, and the development of viable commercial models," Michael Levens, vice president, financial services payments lead at Capgemini, told American Banker in an earlier interview.

Hollie Adams/Bloomberg

HSBC

Chinese e-commerce firm Ant International and HSBC recently took a tokenized deposit project out of pilot. In the case of HSBC, the tokenized deposits are used to speed corporate transactions involving Hong Kong dollars and U.S. dollars on either end. Ant is using its Whale platform, which develops blockchain-powered payment products and is forging partnerships with banks to use tokenized deposits as an option.

Hollie Adams/Bloomberg

Standard Chartered

Standard Chartered recently partnered with HSBC to complete an interbank payment as part of a test of Swift's blockchain ledger. The two banks used Swift to execute a tokenized deposit payment. Swift's ledger supported the messages for the payment.

Standard Chartered said demand is growing for better ways to manage liquidity and working capital, and tokenized deposits will play a larger role.
—Joey Pizzolato, Penny Crosman and Jasmine Ni contributed to this story.