Banks are putting deposits on blockchain networks to bring some stablecoin-like speed to payments while keeping accounts inside regulated institutions. A Benzinga analysis says this strategy could put banks and crypto issuers in competition, although neither model is certain to replace the other.
The distinction starts with what each token represents. Tokenized deposits are money held at regulated banks. Conventional stablecoins generally represent claims on issuers backed by reserve assets. Both can use blockchain technology, but they operate under different legal, regulatory and financial arrangements, the source says.
Putting Deposits on Blockchain
The analysis cites comments by Pablo Hernández de Cos, general manager of the Bank for International Settlements. At the Federal Reserve’s Jackson Hole meeting, he described tokenized bank deposits as more promising for traditional finance’s digital-asset push than the prospect of stablecoins becoming widely accepted payment instruments.
That view frames the business question: banks already hold customer deposits. Tokenization could let them add blockchain transfers while retaining those relationships. The article presents this as a possibility, not a settled outcome. It says banks must also consider compliance, operating costs and whether different networks work together smoothly.
JPMorgan’s earlier initiatives illustrate the approach. In November 2025, the bank made JPM Coin, its dollar-denominated deposit token known as JPMD, available to institutional clients on Base. Eligible institutional customers can transfer tokenized deposits around the clock. The source describes an existing service, not a new launch.
Citigroup has pursued a related path with Citi Token Services, which lets institutional customers move liquidity across participating markets using blockchain infrastructure. The source recounts a weekend cross-border payment that Citi and Singapore-based DBS Bank said they completed using tokenized deposits on Swift’s digital ledger. They reported completing it in minutes. These examples concern institutional use, not broad consumer access.
Different Models for Digital Dollars
The analysis contrasts bank deposits with stablecoins through their relationships to customers and networks. Banks may use deposit tokens for settlement through existing balance sheets and banking relationships. Stablecoins, by contrast, are designed to move across supported networks and connect with decentralized financial applications, according to Frgmnt chief executive and co-founder Aurélien Roussel.
That difference matters to developers who value open networks and links to lending, payments and other onchain applications. Roussel argues tokenized deposits may suit existing bank relationships and institutional settlement, while stablecoins have an advantage in portability and composability. Those are attributed views, not guarantees about which system will prevail.
The article uses Circle’s second-quarter results to show the scale of one stablecoin business. Circle reported $73.3 billion in USDC circulating at quarter-end and $14.8 trillion in quarterly onchain transaction volume, up 151% from the same period a year earlier. Reserve income represented more than 95% of its second-quarter revenue, according to the source. These figures describe Circle’s reported results.
Milton “Todd” Ault, founder of Ault Blockchain, argues banks can retain deposits while offering around-the-clock transfers and access to tokenized assets. John Cho, chief executive and co-founder of Ratio and chief stablecoin officer at the Kaia DLT Foundation, expects different issuers to serve different uses. Cho says banks may focus on institutional settlement, clearing and treasury, while Circle and Tether continue serving exchanges, wallets, payments and broader onchain ecosystems.
BlockTelegraph has covered a separate Swift blockchain ledger pilot related to institutional payment infrastructure. Its report on Canton Network’s financial institutions describes another connection between blockchain networks and financial firms. Coverage of a banking conference on blockchain finance follows the wider industry discussion.
The source portrays banks, stablecoin issuers and infrastructure providers as competing across different parts of a developing financial system. Its examples remain institutional services and reported payment tests. It identifies interoperability, operating costs and compliance as considerations, while leaving open how the models will divide future uses.