Tokenised deposits explained: what banks are building next
Stablecoins showed that money on a shared ledger can move at any hour for almost nothing. Banks have watched that happen to $300bn of dollars that used to sit in their accounts, and their answer is not to fight the ledger but to put their own deposits on it.
This is the third of four Disrupts explainers. It sets out what a tokenised deposit is, how it differs from a stablecoin, who is live with one, and why the distinction is going to matter to anyone who moves money for a living.
What a tokenised deposit is
A bank deposit is already digital. The balance in a current account is an entry in the bank's database, a promise by the bank to pay that amount on demand. A tokenised deposit is the same promise recorded on a blockchain instead of, or as well as, the bank's own database. The token is a claim on the bank, it is covered by the same deposit protection and the same capital rules, and it can be moved between wallets on the ledger the way a stablecoin can.
The difference from a stablecoin is who owes the money and how it is backed. A stablecoin is issued by a non-bank and backed one for one by a segregated pool of Treasuries and cash held for the token holders. A tokenised deposit is issued by a bank and backed the way any deposit is: by the bank's balance sheet, its capital and the deposit guarantee scheme behind it. The stablecoin holder has a claim on a reserve. The deposit token holder has a claim on the bank.
That distinction drives everything else. A tokenised deposit can pay interest, because deposits do. It sits inside existing banking law, so no new licence is needed to issue one. And it does not drain the bank's balance sheet, which a stablecoin does every time a customer converts a deposit into one.
Why banks want them
Three motives sit behind the build. The first is defensive. Every dollar that moves from a bank account into USDC is a dollar the bank no longer has to lend against, and the interest on the Treasuries backing it goes to Circle rather than the bank. The Bank for International Settlements has argued that stablecoins fail the test of singleness of money, since a token from one issuer can trade at a different price from a token from another, and that tokenised deposits preserve singleness because every unit is a claim on a regulated bank redeemable at par through the central bank. Banks have been happy to make that argument for them.
The second motive is operational. Corporate treasurers want to move money between their own accounts in New York, London and Singapore at midnight on a Sunday, and to have a payment release automatically the moment goods are scanned at a port. A deposit on a ledger can do both. A deposit in a core banking system that closes at five o'clock cannot.
The third is that the securities side of the market is tokenising first. If a bond or a fund unit is issued on a ledger, the cash to pay for it needs to be on the same ledger to settle atomically, both legs or neither. A tokenised deposit is the cash leg that lets a bank keep that business.
Who is live
JPMorgan has run the longest. Its Kinexys platform, formerly Onyx, has moved JPM Coin, a tokenised deposit for institutional clients, on a private ledger since 2019 and has passed $1.5tn in cumulative volume. In 2026 the bank put a deposit token on Base, the public Ethereum layer-two run by Coinbase, for institutional clients to use for cross-border payment, intraday liquidity and programmable payouts. It is the first time a global systemically important bank has put its own deposit liability on a public chain.
Citi Token Services runs continuous transfers between Citi's own branches in New York, London and Hong Kong for cash management and trade finance. HSBC's Tokenised Deposit Service operates across Hong Kong, Singapore, the UK, Luxembourg and the US in five currencies, and its Orion platform underpins the UK government's digital gilt pilot. In July 2026 JPMorgan, Bank of America, Citigroup and Wells Fargo said they would build a single shared deposit-token network, operated by The Clearing House, to let commercial deposits move between the four banks around the clock, with a target of mid-2027.
In the United Kingdom, UK Finance ran a two-year pilot of tokenised sterling deposits with Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander on interoperability technology from Quant, testing marketplace payments, mortgage refinancing and digital asset settlement. The pilot ran to mid-2026 and its findings feed the Bank of England's wider work on the future of sterling on shared ledgers.
And Swift, whose blockchain-based ledger carries its existing ISO 20022 messages, said in July 2026 that 17 banks were preparing live 24-hour cross-border payments on it, with tokenised deposits as one permitted cash leg alongside stablecoins and central bank money. That is the piece of infrastructure that could let a Barclays deposit token pay a Citi deposit token without either bank building a bilateral link.
The catch
A deposit token from Bank A is not the same asset as a deposit token from Bank B. Each is a claim on a different balance sheet. Moving value between them still requires the two banks to settle with each other, which today means central bank reserves and the same interbank plumbing as before. Every live scheme so far is either a single bank moving money between its own branches and clients, or a small club of banks that have agreed the rules of settlement between themselves. Interoperability across banks, and across ledgers, is the unsolved problem, and it is precisely what the four-bank US network and the Swift ledger are trying to solve.
Access is the second limit. Deposit tokens are wholesale instruments for corporate and institutional clients. A retail customer cannot yet hold one in a wallet the way they can hold USDC, and there is no sign that banks want them to. That leaves stablecoins with the retail and emerging-market use cases for the foreseeable future.
The third limit is a regulatory one. Britain's and Europe's rules treat a tokenised deposit as a deposit, which is helpful, but the moment a bank issues a token that can circulate freely between third parties it starts to look like e-money or a stablecoin, and a different rulebook applies. Where that line falls is being decided regulator by regulator.
Stablecoin or deposit token
The likely outcome is not that one wins. Stablecoins are open, bearer-style and reach anyone with a wallet, which suits retail, cross-border retail and markets where the local banking system is weak. Deposit tokens are permissioned, interest-bearing and sit inside the regulated perimeter, which suits corporate treasury, securities settlement and anything a bank's risk committee has to sign off. The infrastructure being built now, from Swift's ledger to Circle's network, is asset-agnostic for exactly that reason.
What changes for the fintech sector is the cost and speed of the money underneath it, and that raises the question the final explainer in this series answers: when a payment costs a few basis points to settle, where does the rest of the fee actually go?