Tokenized deposits could cut US bank lending capacity by $580 billion if the tech catches on widely, according to a research paper released on August 25. That equals about 5% of all bank loans.
The paper lays out what happens when tokenized deposits meet fractional reserve banking. If deposits can jump on-chain in minutes instead of sitting still for days, the deposit base gets less stable. And banks, plain and simple, would have to keep more liquidity in reserve and lend less.
LayerZero and Keeta rolled out tokenized deposit products across Ethereum, Solana, and other chains in July 2026, covering nine fiat currencies and turning a theoretical risk into something happening in the real world. The Bank of England has said tokenized deposits should be built into UK payment infrastructure, while South Korea's government has begun testing them for fiscal spending.
In a high-adoption case, the research says lending capacity could drop by $1.2 trillion, which could push US banks to rethink how they fund mortgages, small business loans, and commercial real estate. (crypto.news)