The Federal Reserve Bank of Dallas said in a report published Tuesday that tokenized deposits could speed up payments while making banks’ funding base less stable and putting pressure on lending capacity.
The report examines how broad adoption of tokenized deposits could affect bank liquidity and maturity transformation, the practice of using deposits available on demand to finance longer-term loans.
Instant settlement may weaken deposit stickiness
“Increasing adoption of distributed ledger technology—blockchain is the best known—has opened up digital payment infrastructure, allowing real-time settlement,” the report said. It added that stablecoin growth has drawn attention, backed by efforts to build regulatory regimes in the U.S. and abroad, while tokenized deposits have received much less focus.
The paper distinguishes tokenized deposits from stablecoins such as USDT and USDC. Unlike those instruments, tokenized deposits are regulated and can pay interest. Even so, the report said instant settlement, smart contracts, and agentic AI could make it easier for customers to pursue higher yields, reducing the frictions that keep deposits sticky.
“Sticky deposits rely in part on the existence of frictions preventing rapid reallocation from one bank to another. Instant settlement would allow deposit holders who prioritize yield to switch banks almost instantaneously,” the agency wrote.
Dallas Fed estimates a $700 billion reduction in interest-rate risk capacity
The report said faster outflows and greater sensitivity to interest rates could leave banks less willing to hold longer-term, fixed-rate assets.
The Dallas Fed estimates that a 10% increase in deposit-rate sensitivity could reduce banks’ capacity for interest-rate risk by about $700 billion in 10-year-equivalent terms.
In a separate calculation, the authors said a 10% reduction in the weighted average life of deposits could cut the banking system’s maturity-transformation capacity by $580 billion.
Banks may lean more on term debt
“Alternatively, banks could strive to leave the composition of lending close to unchanged by altering their liabilities in other ways,” the authors wrote. “This would likely include greater reliance on term debt issuance; on the margin, the economics of such lending activity funded by wholesale debt would resemble those of non-bank financial firms and would thus likely adversely impact the cost of credit for consumers and businesses.”
Tokenized payment trials are expanding
The report comes as banks show rising interest in expanding tokenized payment experiments.
In October 2025, Custodia and Vantage unveiled a U.S. tokenized-deposit network. As of February 2026, Barclays was exploring tokenized deposits and stablecoin payments. In March 2026, BMO said it planned round-the-clock tokenized cash settlement with CME Group and Google Cloud.
More recently, in July, global payment system Swift announced a pilot that would let 17 global banks transfer tokenized deposits outside normal banking hours, though final settlement would still depend on legacy payment systems operating during business hours.