America's biggest banks are mounting a direct counteroffensive against stablecoins. JPMorgan Chase, Bank of America, Citigroup, and other major lenders announced Friday they plan to launch a shared tokenized deposit network through The Clearing House by the first half of 2027. The initiative would allow bank deposits to move across blockchain infrastructure with round-the-clock settlement, giving traditional bank money some of the same capabilities that have propelled stablecoins.
How Tokenized Deposits Work — and Why Banks Need Them Now
Unlike stablecoins, tokenized deposits represent a customer's bank deposit as a digital token that can travel over blockchain rails while the funds stay inside the banking system. This gives banks onchain efficiency without losing control over deposits. "Anyone who has ever wired money, especially internationally, knows the process can be expensive and often takes one or two business days to complete," noted Reid Noch, VP of U.S. equity market structure at TD Securities. Tokenized deposits could enable near-instant, always-on transfers while cutting costs and settlement friction, he said.
Stablecoin Threat: 3% to 5% Deposit Runoff Looms
The bank coalition comes as stablecoins — led by Circle's USDC and Tether's USDT — rapidly expand beyond crypto trading into cross-border payments and savings products. Jefferies estimated in a March report that stablecoins could drive a 3% to 5% runoff in core deposits over five years and shrink average bank earnings by roughly 3%. "Following the GENIUS Act, a competition seems to be emerging between stablecoins, tokenized deposits and tokenized money market funds to become the preferred onchain cash instrument," said Noch.
Private Chains vs. Public Ecosystems: A Fundamental Divide
Yet the banking approach diverges sharply from crypto's vision of open networks. The planned Clearing House network will remain a private permissioned system, with banks retaining strict control over users and transactions. Noelle Acheson, author of "Crypto is Macro Now," noted that banks have long experimented with internal private blockchains; the new network extends that model across multiple institutions but stays far removed from public blockchain ecosystems. Even so, she argued the project proves banks are taking stablecoins seriously despite public skepticism from executives like JPM CEO Jamie Dimon. For many corporate clients, a bank-backed system may fit better within existing compliance frameworks. Digital Chamber CEO Cody Carbone framed the development as a milestone: "The biggest banks in America are voluntarily coming onchain... they're proving exactly what our industry has been building toward all along." If successful, the Clearing House initiative could become a formidable competitor to stablecoins for corporate payments and treasury operations, underscoring a broader trend: traditional finance is adopting blockchain even as it competes with crypto-native alternatives built on the same rails.