Major US banks are preparing a tokenized deposit network for 2027, aiming to move bank deposits over blockchain rails with 24/7 transaction capability. The plan would give traditional deposits some of the technical advantages that helped stablecoins gain traction, while setting up a sharper contest over which form of digital cash will dominate blockchain-based payments.
Reid Noch, Vice President of US Equity Market Structure at TD Securities, said the GENIUS Act has triggered a clear race among stablecoins, tokenized deposits, and tokenized money market funds to become the preferred digital cash instrument on blockchain networks.
Tokenized deposits keep funds inside the banking system
A tokenized deposit is a traditional bank deposit represented as a digital token. Unlike stablecoins, these tokens remain fully within the banking system and are treated as direct liabilities of the bank. The structure is designed to move clients onto blockchain infrastructure without allowing deposits to leave the regulated banking sector.
The article notes that Circle’s USDC and Tether’s USDT still account for most of the stablecoin market. These dollar-pegged tokens are increasingly used for crypto trading, cross-border transfers, and savings products. Banks are concerned that wider stablecoin adoption could pull customer funds out of conventional accounts and into crypto wallets.
Banks see faster cross-border payments as a key use case
Noch said the tokenized deposit model could address long-standing inefficiencies in global payments. International transfers under the current system are often expensive and usually take one to two business days to settle. A blockchain-based infrastructure could cut both delays and costs while allowing transfers at any hour.
That payment angle sits near the center of the banking push. If The Clearing House initiative works as planned, the network could become a strong alternative to stablecoins in corporate payments and treasury management.
Traditional finance is adopting blockchain on its own terms
Cody Carbone, Chief Policy Officer at the Digital Chamber, said the largest US banks are now willingly moving onto blockchain, matching a direction the industry has pursued for years. Even so, the banking model differs sharply from the open-network approach common in crypto.
Noelle Acheson, author of the “Crypto is Macro Now” newsletter, said banks have spent years experimenting with permissioned blockchain systems that they control closely. In her view, a network run through The Clearing House would extend that model across multiple banks, while still stopping short of the open structure where stablecoins move freely.
Acheson also said the move shows banks treat stablecoins as a serious threat behind closed doors, even if some executives have sounded cautious in public. She added that many corporate clients may prefer a bank-backed system that fits existing compliance policies, even though stablecoins offer greater liquidity and flexibility.
Jefferies projects pressure on bank deposits over five years
A Jefferies report published in March projected that stablecoins could reduce core bank deposits by 3% to 5% over the next five years, while trimming average bank earnings by about 3%. That forecast helps explain why banks are accelerating their own blockchain-based payment infrastructure.
Based on the details available, the largest US banks are not trying to replicate open crypto networks. They are building a controlled blockchain payment layer that turns conventional deposits into onchain settlement instruments under existing regulatory oversight. Competition among stablecoins, tokenized deposits, and tokenized money market funds is now moving from product design to payment infrastructure.