Tokenized deposits: why banks are moving customer funds to the blockchain
The market for tokenized assets has become one of the fastest-growing segments of the cryptocurrency industry. According to DeFi Llama, as of July 2026, the RWA* market was valued at $26.7 billion. Over the past year alone, this figure has almost doubled, while at the beginning of 2025 it stood at just $4 billion. Tokenized deposits, which combine traditional banking products with the capabilities of blockchain technology, are emerging as one of the most promising areas within this market.
* RWA (Real-World Assets) are traditional financial assets whose ownership rights are represented on a blockchain in the form of tokens. RWAs may include real estate, bonds, shares, bank deposits, precious metals, commodities, and other assets that exist outside the blockchain. Tokenization enables the recording of rights to such assets in a digital system, facilitates faster settlement, automates certain operations, and, in some cases, divides an asset into smaller fractions. In particular, tokenized deposits represent a digital reflection of customer funds held at a bank and remain linked to the credit institution's liabilities.
At the same time, the RWA market continues to grow despite the overall negative trend in the cryptocurrency market. Since the beginning of 2026, the total market capitalization of digital assets has fallen by more than 25%, from $2.96 trillion to $2.17 trillion. Over the same period, the market for tokenized assets grew by almost 70%, indicating strong investor interest in the segment. Growing interest in RWAs is also contributing to the development of tokenized deposits.
To keep pace with the global trend, banks have joined the expanding RWA segment and begun issuing their own tokenized deposits. For banks, tokenized deposits are becoming a way to introduce the benefits of blockchain technology while preserving the familiar legal nature of a bank deposit.
What are tokenized deposits?
Tokenized deposits are, in essence, deposit balances recorded not only within a bank's internal system but also on a blockchain.
Tokenized deposits first became a major topic of discussion in 2025, when the British trade association UK Finance announced the launch of its own pilot project involving tokenized deposits denominated in British pounds.
It should be noted that tokenized deposits differ in nature from ordinary stablecoins and CBDCs*, including in legal terms.
* CBDC (Central Bank Digital Currency) is a digital form of an official national currency issued and controlled by a country's central bank. Unlike cryptocurrencies and most stablecoins, a CBDC is a direct liability of the central bank and has the status of an official means of payment within the relevant national jurisdiction.
For example, the key characteristics of stablecoins are the reserves that reflect the solvency of the issuing company.
In the case of tokenized deposits, the primary characteristics are the rules governing redemption and interest payments.
Another difference between stablecoins and tokenized deposits is that the former use open, public infrastructure, while the latter rely on closed, private infrastructure.
In other words, tokenized deposits operate not on public networks such as Ethereum or BNB Chain but on closed, private banking blockchains, raising questions about the transparency of such systems.
Therefore, while stablecoins are subject to dedicated legislation, such as MiCA* in the European Union, tokenized deposits are governed by general banking regulations.
* MiCA (Markets in Crypto-Assets Regulation) is a European Union regulation establishing uniform rules for the issuance, public offering and circulation of crypto-assets within the EU. The regulation sets requirements for crypto-asset issuers, including issuers of certain types of stablecoins, as well as cryptocurrency exchanges, services and other service providers. It includes requirements relating to information disclosure, customer protection, reserve management, corporate capital, and the prevention of market abuse.
Why do banks need tokenized deposits?
As the cryptocurrency market developed, particularly the RWA and stablecoin segments, traditional banks began losing influence within the global financial sector. This became one of the main factors behind the emergence of tokenized deposits.
In other words, customer funds are moving out of traditional bank deposits and into cryptocurrencies.
This is reflected in the growth of the stablecoin market. According to DeFi Llama data for July 2026, since the beginning of 2025 alone, the stablecoin segment has grown by more than 50%, from $205 billion to $312 billion.
This trend is likely to continue in the future. According to Bank of America CEO Brian Moynihan, the outflow of funds from the US banking system into stablecoins could reach $6 trillion, equivalent to 30%-35% of the country's total deposits.
To avoid losing their key role in the global financial environment, banks have joined the growing RWA segment and begun launching tokenized deposits.
Advantages and risks of tokenized deposits
Unlike stablecoins, which may face issues related to the transparency of their reserves, tokenized deposits carry risks of a different nature.
The main risks associated with tokenized deposits relate to liquidity and operational matters, including:
- Failures in banks' internal systems;
- Errors in transaction processing;
- Problems integrating blockchain technology into banking systems;
- Information security threats.
In addition, because tokenized deposit systems are closed, they create another problem: interoperability. In other words, transfers of tokenized deposits between different banks may be difficult because different banks use different technologies.
However, tokenized deposits also have their own advantages. The first advantage of tokenized deposits is their regulatory framework.
Unlike stablecoins, tokenized deposits are issued exclusively by regulated banks, which are required to comply with capital, liquidity, and compliance requirements.
For this reason, tokenized deposits are better suited to rapid settlements with low operating costs, not only for individuals but also for large companies and banks. In addition, tokenized deposits offer various potential use cases, including:
- Transactions involving fiat currencies;
- Settlements involving tokenized securities;
- Liquidity management, including corporate liquidity management;
- Interbank settlements.
What tokenized deposits exist?
JPM Coin
Tokenized deposits may take different forms. One such form is a deposit token, the first of which, JPM Coin, was officially launched by the globally renowned bank JPMorgan Chase.
JPM Coin represents US dollar bank deposits executed via a public blockchain network built on Base, an Ethereum Layer 2 solution. Well-known financial companies such as Mastercard and B2C2 participated in the JPM Coin tokenized deposit project.
In addition to JPM Coin, the company launched another platform, Kynexis, which, as of July 2026, had processed more than $3 trillion in tokenized digital deposits.
Multi Token Network (MTN)
MTN is Mastercard's experiment involving tokenized deposits.
Mastercard conducted the first test of MTN involving tokenized deposits in 2024. In the same year, the Mastercard network accounted for approximately 30% of all transactions involving tokenized digital assets.
Regulated Liability Network (RLN)
Unlike other products, RLN is not a finished platform but a concept for a digital financial infrastructure in which settlements between organizations are carried out using tokenized deposits.
The RLN concept was tested in 2022–2023 in cooperation with the Federal Reserve Bank of New York, although the tests involved digital dollars. The system works as follows: commercial banks can issue their own tokenized deposits and use them to conduct settlements with other participating companies.
In 2025, a new series of experiments involving RLN and tokenized deposits began under the management of UK Finance. Well-known financial companies, including Barclays, HSBC, Citi, and Mastercard, are participating in the initiative.
The tokenized deposit pilot project will continue at least until the end of 2026 and will cover several use cases, including real estate transactions.