JPMorgan, Citi, Bank of America Plan Shared Tokenized Deposit Network by 2027

America's biggest banks, including JPMorgan, Citi and Bank of America, plan to build a shared, tokenized deposit network by the first half of 2027 to protect their deposits from the threat posed by stablecoins, the Wall Street Journal reported. The system will be operated by The Clearing House, the payments company collectively owned by the banks — presumably after they finish arguing over what to call it, because some are already calling the network "the bridge" while others insist on "the chain," the WSJ noted.

Tokenized deposits are blockchain representations of customers' money held at a bank. The planned system will convert these deposits into a digital token that can be transferred swiftly on a blockchain, giving customers the speed of crypto without the part where their money actually leaves the bank.

Stablecoins are dollar-pegged digital assets issued by crypto companies that live outside the traditional banking system. The Clarity Act legislation currently advancing through Congress could allow them to pay returns to holders, potentially making bank deposits less attractive because the tokens also offer faster, cheaper payment capabilities over a blockchain. It is, in effect, a race the banks would prefer not to lose — or even enter.

If customers adopt stablecoins at scale, banks could face a deposit flight to crypto wallets, and deposits are what banks rely on to extend credit in the economy. So the stakes are not merely philosophical.

The tokenized deposit network is designed to ensure deposits remain within the banking system while giving them crypto-like capabilities — the regulatory comfort of a bank balance sheet with the settlement speed of a Saturday-night stablecoin transfer.

The WSJ report said the Clearing House expects large multinationals to embrace the tokenized deposit network as a gateway to programmable treasury options, real-time liquidity management and cross-border payments, the sort of features treasurers have been politely requesting for roughly a decade.

"This is a big move for the banks," CEO David Watson told the newspaper, describing a "radically different" future around onchain payments. Bold words for an industry that, until recently, treated blockchain like a suspicious package.