The financial world is quietly undergoing a transformation—one driven not by startups or crypto natives, but by the very institutions that have long defined traditional finance. From JPMorgan to UBS, legacy banks and asset managers are making bold moves into asset tokenization, with deposit tokenization emerging as a frontrunner in this new era of digital finance.
While much attention has been focused on BlackRock’s spot Bitcoin ETF, the broader trend it represents—mainstream institutional adoption of blockchain-based financial products—is far more significant. This shift isn't speculative; it's strategic, compliance-driven, and built on infrastructure that could redefine how value moves across global markets.
Let’s explore how major financial players are advancing deposit tokenization, the infrastructure enabling it, and whether this movement could indeed ignite the next bull market.
The Three Stages of Asset Tokenization
Before diving into individual players, it's helpful to understand the evolution of asset tokenization in traditional finance. The process generally unfolds in three phases:
- Integrating on-chain assets into traditional fund structures
This includes holding cryptocurrencies like Bitcoin within regulated ETFs—a milestone recently achieved with BlackRock’s approval. - Moving intermediary services onto the blockchain
Clearing, settlement, custody, and payment rails are being reimagined using distributed ledger technology (DLT) for greater speed and efficiency. - Establishing secondary markets for tokenized securities
Once assets are digitized and processes automated, they can be traded peer-to-peer in real time—without intermediaries.
Bitcoin, as a native on-chain asset, has paved the way. But what comes next may be even more impactful: the tokenization of real-world assets (RWAs), starting with bank deposits.
👉 Discover how leading financial institutions are preparing for the tokenized future of finance.
Major Financial Institutions Embracing Deposit Tokenization
JPMorgan: Pioneering Institutional Blockchain Infrastructure
JPMorgan has been at the forefront of blockchain innovation since 2015 through its Onyx division—an internal platform designed to digitize payments and securities settlements. To date, Onyx has facilitated over $1 trillion in asset transfers, serving clients like Goldman Sachs.
One of its most notable developments is JPM Coin, a permissioned stablecoin backed one-to-one by U.S. dollar deposits. While not yet publicly available, JPM Coin enables instantaneous cross-border payments and intraday repo financing within a controlled network.
The bank also filed a trademark for the "J.P. Morgan Wallet", signaling long-term ambitions in digital asset custody and identity management. These efforts position JPMorgan not just as a participant in the tokenized economy—but as a foundational builder of its infrastructure.
Citigroup: Advancing Tokenization in Trade Finance
In September, Citigroup launched its own tokenized deposit service, allowing institutional clients to convert cash balances into digital tokens for use in cross-border transactions and automated trade finance.
Notably, Citi partnered with shipping giant Maersk to streamline canal toll payments—an area where legacy banking systems often take days to settle. By using tokenized deposits, transaction times drop from days to minutes, eliminating costly intermediaries like letters of credit and bank guarantees.
This use case highlights a key advantage of deposit tokenization: operational efficiency at scale—especially in global supply chains where speed and certainty matter.
UBS: Launching a Tokenized Money Market Fund
In October, UBS Asset Management unveiled a tokenized money market fund built on Ethereum’s Sepolia testnet. Hosted on UBS’s proprietary digital asset platform and compliant with Singaporean regulations, this pilot demonstrates how traditional investment vehicles can be reimagined for blockchain environments.
Given that money market funds function similarly to interest-bearing deposits, this move is effectively a form of deposit tokenization—bringing retail-like accessibility to institutional-grade assets via programmable finance.
👉 See how tokenized funds are reshaping institutional investing strategies today.
Bridging the Gap: Settlement Networks in Motion
Despite progress, interoperability remains a challenge. Most bank-issued tokens operate within closed networks. True liquidity requires seamless connectivity between institutions—and several initiatives aim to deliver exactly that.
The Regulated Liability Network (RLN) – A Fed-Backed Vision
In July, the Federal Reserve Bank of New York Innovation Center introduced the concept of a Regulated Liability Network (RLN)—a DLT-based system allowing regulated entities to issue and settle digital liabilities (like tokenized deposits) in real time.
Participants include SWIFT, BNY Mellon, Citigroup, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo. If adopted widely, RLN could become the backbone of a new financial rail—one that supports instant settlement without disintermediating trusted institutions.
SWIFT’s Response: Evolution, Not Extinction
Rather than resist disruption, SWIFT is adapting. In August, it launched a proof-of-concept connecting 11 banks—including BNP Paribas and Clearstream—via a DLT network integrated with its existing messaging system.
Using Chainlink’s Cross-Chain Interoperability Protocol (CCIP), SWIFT enables assets to move across private blockchains and public networks like Ethereum. This hybrid model preserves institutional control while enabling future interoperability.
Chainlink’s role here is pivotal: its oracle network acts as a secure bridge between legacy systems and decentralized infrastructure.
Where Do Traditional Exchanges Stand?
Interestingly, while banks innovate aggressively, some traditional exchanges lag behind.
Nasdaq Pauses Digital Custody Plans
In July, Nasdaq announced a pause in its digital asset custody solution—first proposed in 2018—citing regulatory uncertainty. Ironically, many Bitcoin ETFs now rely on Coinbase as custodian, despite being listed on Nasdaq itself.
This hesitation underscores the complexity of balancing innovation with compliance—but doesn’t diminish Nasdaq’s underlying technological readiness.
London and Hong Kong Exchanges: Progressing Cautiously
The London Stock Exchange is exploring a blockchain-based digital asset market operating independently from its main exchange, pending regulatory approval from UK authorities.
Meanwhile, Hong Kong has taken a proactive stance, launching Bitcoin and Ethereum futures ETFs in late 2022—products tied to CME futures contracts. With the U.S. now approving spot Bitcoin ETFs, Hong Kong is expected to follow suit soon.
Could Asset Tokenization Trigger the Next Bull Run?
Absolutely—and deposit tokenization may be the catalyst.
Consider this: every dollar held in a bank account is already a digital liability. What changes when those liabilities become programmable tokens on a shared ledger? Suddenly, trillions in dormant capital gain liquidity, composability, and global reach.
As JPMorgan’s research suggests, tokenized deposits can replicate many benefits of central bank digital currencies (CBDCs)—faster settlement, reduced counterparty risk, lower transaction costs—even without government-issued digital cash.
With supportive signals from regulators—such as U.S. Congressional backing for PayPal’s stablecoin—the path forward is clearing rapidly.
Frequently Asked Questions (FAQ)
Q: What is deposit tokenization?
A: It’s the process of converting traditional bank deposits into blockchain-based digital tokens that represent equivalent value and can be used for instant settlement or programmable finance.
Q: Are these tokens available to retail investors?
A: Not yet. Most initiatives are currently limited to institutional clients due to regulatory and operational constraints.
Q: How does deposit tokenization differ from stablecoins?
A: While both represent digital dollars, deposit tokens are issued by regulated banks within closed networks, whereas stablecoins like USDC or PayPal’s PYUSD operate on public blockchains with broader accessibility.
Q: Can tokenized deposits replace CBDCs?
A: Not fully—but they can fulfill similar functions in payment efficiency and financial inclusion if widely adopted across institutions.
Q: Is this trend limited to the U.S.?
A: No. Institutions in Europe (UBS), Asia (HKEX), and global networks (SWIFT) are all advancing parallel efforts—indicating a worldwide shift.
Q: What risks exist with tokenized deposits?
A: Key concerns include regulatory fragmentation, interoperability challenges, cybersecurity threats, and concentration of control among major banks.
👉 Stay ahead of the curve—learn how tokenized assets are transforming global finance.
The convergence of banking infrastructure and blockchain technology is no longer theoretical. With trillion-dollar institutions actively building tokenized systems—and regulators increasingly supportive—the next phase of financial evolution is already underway.
Deposit tokenization won’t just enable faster payments; it will unlock unprecedented capital efficiency across markets. And when trillions in traditionally illiquid assets go on-chain? That could very well spark the next bull market.