A working paper from the ECB published this year suggests that reading may be subject to some challenge in the coming years. And I think it’s really a consequential piece of banking research for anyone watching what tokenization does to bank funding. What it finds is that deposit stickiness is not actually a behavior at all, rather it’s more like a census of who hasn’t left yet. The deposit franchise it describes turns out to be priced on two frictions at once. Those frictions are the depositor’s attention, and the speed of the money. If you’ve got this far, and you’ve read any of my previous stuff, then you know I’m very focused on what atomic settlement does to the second. The ECB has now measured what happens to the first, and now I can’t stop thinking about how the two are about to meet on the same balance sheet.

A census, not a behavior

ECB Working Paper 3255, by Ugo Albertazzi, Finn Faber, Alessandro Gavazza, Oana-Maria Georgescu and Ernest Lecomte, builds a structural model of euro area deposit markets from 2007 to 2024 and asks a simple question. Why is the pass through of policy rates to deposit rates so low, and why does it keep falling? Deposit betas declined from roughly 0.30 in the 2007 hiking cycle to roughly 0.10 in 2022, and the standard explanations reach for the bank side. Bankers will be familiar with impacts of things like excess liquidity, capital positions and concentration.

The paper rejects all of that, I must say almost brutally. The authors test the explanations by re-running history inside their model. First they made every bank identical, same liquidity, same capital, same competitive position, and deposit rates barely move. Then they made every depositor identical instead, and lo and behold rates jump! In that version of 2024, households get paid nearly half a percentage point more on their everyday accounts. So actually the low rates were never about what banks were doing, they were about which customers were left holding the accounts.

Let me pull the thread and try and break this down a bit more. So when rates rise, the most rate sensitive, highest balance depositors leave first, into term deposits, money market funds, e-money etc. Then what remains is a pool that is, almost by design, less rate sensitive than the one the bank started with, so the measured beta falls, the bank’s pricing power rises, and the margin expands. In the authors words, rate sensitive depositors switching out

“decreased the average rate sensitivity of the remaining pool of sight deposits. In turn, banks market power over sight deposits increased.”

The franchise didn’t infact get stronger. The customers who would have tested it left, and the beta was measured on the ones who stayed.

Its worth looking at the data here, because the top 10% of depositors hold 28% of household deposits, and the markdown on demand deposits, the gap between what the money earns and what the bank pays for it, equals 92% of the deposit business’s gross revenue.

The deposit franchise isn’t a lending business with a funding side. Its infact what most of us who have worked in this industry already know, its an inertia business, and so nearly all of the revenue is actually the measured inattention of whoever hasn’t left yet.

The planes that came back

It reminds me of the famous piece of statistical history. In the Second World War, the US military studied the bullet holes on bombers returning from missions and proposed adding armor where the holes clustered. Abraham Wald, the statistician they consulted, told them to armor where the holes weren’t. The returning planes were the survivors. The holes they carried marked the places a plane could be shot and still come home, and actually the fatal bullet holes were on the aircraft nobody got to examine.

Deposit analytics has been armoring the bullet holes for forty years. Every stickiness estimate, every core deposit intangible valuation, every funds transfer pricing assumption is fitted to the depositors who stayed, and the model ends up promoting their inertia into a law of nature. Thats why this ECB paper is so fascinating, its as far as I know, the first study to instrument the survivors properly and show that the sticky pool is a residue, and not a population. Betas are state dependent. The same rate rise produces a different answer depending on who happens to be left when it arrives. Which I think means the number every ALCO treats as a parameter is actually a snapshot of a queue, taken mid exit.

And we already know, empirically, what the queue looks like when it moves. The FDIC’s forensic study of the 2023 failures, built from the actual core and wire records seized at SVB, Signature and First Republic, found that two of the banks lost roughly half their deposits in three business days, and the depositors who ran emptied their business operations accounts completely, the exact category every model treats as stickiest. At Signature, escrow style balances fell 83% in a couple of business days. The survivors behavior told us nothing about the planes that didn’t come back, right up until the shooting started.

Two frictions, one franchise

Now let’s separate the two things that 92% markdown is actually charging for, because I think they fail a bit differently.

The first is attention. The depositor has gotta notice that their money earns nothing, find a better rate, and then decide the difference is worth the bother. The second is settlement. Even a depositor who has noticed then faces cutoff times, banking hours, transfer forms, and a day or three of being out of the market, and for an operating balance that might be needed tomorrow morning, that delay is not just an inconvenience, it’s basically the reason not to move at all. I’d posit the deposit franchise earns its markdown because both frictions bind at once.

History shows what happens when only one of them erodes. Money market funds have been attacking the attention friction since the 1970s, and they now hold $7.6 trillion, but the erosion took fifty years, because every dollar still had to be noticed by a human and moved over rails that closed at five. Non interest bearing deposits at US banks fell from $5.5 trillion at the March 2022 peak to $3.85 trillion three years later, a 30% decline through that same slow, human channel. Painful, survivable, visible in the data as it happened. The franchise repriced and carried on, which is probably why every bankers instinct says this time is like last time.

Tokenization is what removes the second friction, and its why I’m so interested in this nerdy deposit pricing paper. A tokenized money market fund settles atomically, around the clock, with no settlement risk on the round trip. Sandy Kaul at Franklin Templeton has already named the end state,

the stablecoin is the checking account, the tokenized fund is the savings account, and you rotate between them at the speed of a swap.

I made the corporate version of this argument in The End of Idle Money, if $100 million can move into a tokenized fund and back inside an hour with no settlement risk, it will. The ECB paper supplies the retail half, the residual pools stickiness was never loyalty, it was the price of noticing plus the price of moving. Tokenized rails are gonna take the price of moving to zero. Which leaves the whole franchise standing on a single friction, attention.

The agent always notices

Attention is exactly what an agent deletes I think, and this is where it all gets super interesting.

The ECB authors gesture at the risk, flagging “digital platforms that aggregate and compare deposit rates” as a force that raises effective rate sensitivity. But a comparison platform still needs the human to look at it. An agent doesn’t. It is attention running continuously, at practically zero marginal cost, on behalf of exactly the low balance, inertial depositors who anchor the residual pool, and the FCA’s Mills Review, published this month, is the first regulatory document I’ve seen to take it seriously. It gives the risk a name, hyper switching, and its language is worth quoting because I haven’t really seen regulators write like this

“in a world of empowered AI agents, able to shift customer savings between banks and building societies instantly and effortlessly, the banking market could be more fragile, leading potentially to financial stability implications.”

You can’t help but note the compound in that sentence! Instantly is the rail. Effortlessly is the agent. Neither of the words alone produces fragility, an agent on legacy rails spends its life waiting for ACH windows, and an instant rail without the agent still needs a human to care. The Review flags mutuals and smaller deposit funded institutions as most exposed.

The demand side is further along than most bankers assume. The Review’s survey of just over 5,000 UK adults found 26% already trust general purpose tools like ChatGPT for financial advice, 20% say they would use a fully autonomous AI to manage their finances, and only 40% know there is currently no recourse if it goes wrong. It notes £300 billion sitting in low interest UK accounts, which is the pool an optimizing agent gets pointed at, and cites Alipay processing 120 million agent initiated transactions in a single week.

A McKinsey 2026 banking review makes the same point from the industry side. It forecasts that agentic AI sweeping idle cash to higher yield in real time threatens the roughly 60% of retail banking revenue that is net interest income, and generative AI reached 45% of the US working age population in two years, against fifteen years for digital banking. I’ll tell anyone that’ll listen that the platform shifts are moving faster and faster.

If we put it all together, then I think it changes the shape of the risk. The ECB shows betas are compositional, they fall because the attentive leave and the inattentive remain, and they are state dependent, the same rate rise produces a different answer depending on who is left in the pool. An agent flips the composition. The beta doesn’t drift up as delegation spreads. It’ll snap, discontinuously, the day the residual pool stops being mostly inattentive and starts being mostly delegated, and because the historical series was generated by humans switching slowly over slow rails, I think we’ll see that every backtest will look fine until the day it doesn’t.

Let me try and be clear about whats evidence here and whats my thinking. The ECB paper never mentions AI agents or tokenized money; its outside options are money funds and e-money, but the agentic reading is mine. But the paper’s core result doesn’t have to be agentic, it just needs something to lower the cost of noticing, and something else to lower the cost of moving. To me, the first is a product description of an AI financial agent. The second is the product description of tokenized settlement.

Repricing the inertia business

Euro area banks paid 23 bps on overnight deposits while earning 295 bps on the money. I know that American depositors get a better deal and American markdowns are thinner, but you can’t reprice that the way you’d reprice a product! It ain’t a product, its actually the business. Record margins in the industry are the reward for holding customers who had no easy way to leave.

The ECB authors got there way before I did. They close their paper by saying banks now depend on a core of inertial depositors, and that nobody knows how those depositors behave under stress, mainly because they’ve never really been tested. They also note that platforms comparing deposit rates across banks could make retail depositors far more rate sensitive. I think they stop one step short of what’s about to do that comparing.

So what does an ALCO do with this on a Tuesday morning? I can think of three things.

We should think about how we segment the book by who’s holding the phone, not by product or balance size. The mix of the pool is really the name of the game here, and a big determinant of that future mix is whether an agent sits between the customer and the account. The paper does show why thats new. The top tenth of households holds 28% of deposits, and above the 90th percentile the odds of leaving money in an overnight account fall off a cliff. Small balances have stayed put because paying attention costs more than its worth on $2000. But you have to assume that an agent makes that attention nearly free. A $2000 balance with an agent attached is likely going to behave like a $2 million balance with a treasurer attached.

Ok, so we then need to price for the agents ranking and not the branch across the street. The FCA reckons 11 million UK adults, about one in five, are open to letting AI act for them inside goals they set once. When the marginal deposit is allocated by a ranking, a bank that a machine can’t read isn’t in the game at all.

I think you need then to take a position on the rails. The money that leaves goes to a tokenized instrument over a tokenized rail, and whether that rail is your tokenized deposit or someone elses stablecoin decides whether the balance leaves the bank or just moves around inside it. Same receive before issue argument I made for the long tail, but now on the funding side.

I don’t want to be all doom and gloom here. Agents need mandates. Mandates need rules that don’t exist yet, no agent registry, no liability regime, no redress when it goes wrong. In the US those rules exist to lesser extent than they did two years ago. Section 1033 was supposed to settle who can act on a customer's behalf, what they get to see, and who eats the loss when it goes wrong. The CFPB then told the court its own rule was unlawful and should be vacated, and is of course now rewriting it. One of the questions formally reopened is whether a consumers representative means a fiduciary, or any third party the customer authorizes?

Banks won that case, and all the trade groups called it a win for accountability. What they actually removed was the rulebook the agent would have had to follow, but not the agent. Still, we all know adoption runs slower than the technology. It always has, and I’ve spent enough years inside banks to know how long the last mile can take.

But if you ask me whats different this time? Its the brakes are coming off together, not one after the other. Attention is becoming software while settlement is becoming atomic. Sequence would have bought a decade. Parallel probably buys a lot less than we’d like to think.

Banks survived money market funds, survived deregulation, survived the comparison sites, and repriced each time without dying. The base case here is adaptation. What has changed though is the instrument you use to see it coming. Every previous repricing showed up in the deposit beta while it was happening, because people switch in crowds, slowly, through branches and call centers that close. I really believe most of what looks like loyalty is just the loyal ones being all that’s left.

We already know what happens when that base stops being inertial. Silicon Valley Bank lost $42 billion in a day, and that was humans, on a Thursday, using rails that closed at five. Nobody’s beta caught it.

Deposit betas were never actually behavior. They were a census taken on rails that closed at five, and its unlikely either half of that survives over the coming years… Agents switch in code, over rails that don’t close. And the beta that’s supposed to warn you was designed and fitted to humans.

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References

The measured mechanism

• Albertazzi, Faber, Gavazza, Georgescu, Lecomte, “Bank Deposit Pricing in the Euro Area,” ECB Working Paper No 3255 (2026)

• Drechsler, Savov, Schnabl, “The Deposits Channel of Monetary Policy” (NBER w22152)

• The Legend of Abraham Wald (AMS feature column on survivorship bias)

The empirical runs and the aggregates

• FDIC staff study: Dissecting Depositor Flight (May 2026)

• Non-interest-bearing deposit series, FDIC QBP via FRED

• ICI money market fund assets, weekly series

The agentic layer and the rails

• The Mills Review: AI and the future of retail financial services (FCA, July 2026, 147pp) and FCA press release

• McKinsey, Global Banking Annual Review 2026: Precision with Speed

Earlier pieces in this arc: The End of Idle Money, Friction as the Franchise, and Every Bank Needs a Wallet.

I wrote earlier this year that tokenization is not a product, it’s infrastructure. I still believe that, but I’ve come to think “infrastructure” is also incomplete. My challenge is that the infrastructure framing keeps a bank inward focused, debating its own architecture while the actual transformation happens to its customers, its revenue pools, and its funding model. So let me have a go at laying the argument out properly. First, what is moving, then why the cash leg has to follow, and then the part that doesn’t fit in either the product box or the infrastructure box.

The asset side is already moving

Larry Fink made the call explicit at the New York Times DealBook summit at the end of 2022

BlackRock backed it with product. BUIDL, its tokenized money market fund, launched on Ethereum in March 2024, and it became the largest tokenized Treasury fund within six weeks, and was the first to cross $1 billion in March 2025. It is now multichain, holds around $2.5 billion, and the category has grown crowded enough that Circle’s USYC has since taken the top spot.

When you think about the institutional roll call it has actually stopped being interesting because its stopped being surprising. Franklin Templeton’s BENJI is in production. Apollo has tokenized credit through Securitize, KKR has tokenized private equity through the same platform, and Hamilton Lane has tokenized private markets funds. DTCC moved its Tokenization Service from concept into live production this month, with a scalable launch targeted for October. JPMorgan’s Tokenized Collateral Network is moving repo collateral, and Kinexys, its broader blockchain platform, processes over $5 billion per day. Goldman, Citi, BNY, and HSBC have all built tokenized issuance and settlement infrastructure. Citi projects $4 trillion in tokenized assets by 2030, and BCG’s number is higher.

Funny. Because no single name on that list matters that much, but the breadth does. Treasuries, money market funds, equities, private credit, private equity, repo collateral, and structured products are all tokenizing at the same time, at the largest asset managers in the world, on a timeline measured in years rather than decades. This was the epiphany for me! The speed of whats happening in capital markets. Bankers who treat that as a separate system from the one they operate in are defending a very strange position, because the cash that settles those markets sits in their institutions.

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The cash leg follows or the trade breaks

When a tokenized asset settles in seconds onchain, its payment leg has to settle on the same timeline or the trade does not happen atomically. I think that asymmetry has only three possible resolutions.

Prefunding works in principle. The buyer parks dollars in an escrow account days before the trade, capital sits idle, the trade is slow, and the operational overhead is real. Most institutional tokenized trades currently do this, but its exactly what BlackRock, Apollo, and the others are trying to engineer out of their products.

Principal risk is the alternative to prefunding and thats off the table. The buyer pays and waits for the asset, or the seller delivers and waits for payment. This is the failure mode the entire post Lehman settlement reform agenda was built to eliminate, and reintroducing it at institutional scale has gotta be a nonstarter.

That leaves tokenized cash on the same rail as the tokenized asset, settling atomically. The asset and the payment clear in a single transaction or neither does. This really is the only resolution that scales, and it is what every major institutional design now assumes. BUIDL redeems into USDC through Circle. JPMorgan’s collateral network settles against the bank’s own deposit token. Project Agorá demonstrated tokenized commercial bank deposits clearing against tokenized central bank reserves in May 2026. The cash leg cannot stay on ACH and Fedwire while the asset leg moves to atomic onchain settlement. Either tokenized cash exists at scale, or institutional tokenization stops. Institutional tokenization really does not look like its stopping anytime soon.

So far, this is the infrastructure argument. The reason it’s still incomplete is that I believe infrastructure transitions of this kind don’t stay infrastructure transitions, and I reckon there’s an interesting precedent that illustrates how.

The Blockbuster category error

Ok, so a big hat tip to Elizabeth St-Onge of TD, who riffed on Blockbuster and Netflix with me. I think the analogy is good here because it describes a specific failure of categorization rather than just a generic story about innovation, and perhaps the history is a little more pointy than the version we all usually hear.

Blockbuster and Netflix were both in the video rental business, and for its first two years Netflix even ran Blockbuster’s model by mail. So pay 4 bucks a title, due dates, late fees. Then in September 1999 it did a new thing when it introduced a flat monthly subscription with no due dates and no late fees, and by early 2000 it had dropped per title pricing entirely. Now, that was not only a distribution decision. It feels to me like it was a repricing of the whole customer relationship, and it was aimed squarely at the most profitable line in Blockbuster’s P&L. In 2000, Blockbuster collected nearly $800 million in late fees, around 16 percent of its revenue! Friction income.

When Blockbuster finally killed its own late fees in January 2005, walking away from hundreds of millions a year in the name of competing, the customers it was trying to keep had already learned there was a better deal elsewhere. Streaming, when it arrived in 2007, was actually the second act, and within a decade of it Netflix was making the movies rather than shipping them. Blockbuster, which understood the rental business better than anyone alive, went bankrupt in 2010.

I think its worth noting the order of operations here, because to me it’s the part of the analogy thats super interesting. The business model attack came first, on identical infrastructure, with DVDs in the mail. The infrastructure shift came second and finished the job. To call the whole thing an infrastructure transition really misses it I think, and I do wonder if the same misfiling is happening in banking, with the same sequence. Late fees were revenue the customer paid for friction they didn’t choose. And if you haven’t picked up the theme yet, so is float.

Lets have a go at running the parallel properly. Theres no doubt the rail change is real, atomic settlement instead of batch, always on instead of banking hours, programmable instead of static. But I think the rail change triggers a behavior change, and that behavior change is where bank P&Ls actually live. Probably the most basic question in commercial banking is why does a corporate keep idle cash in a non interest bearing account? The honest answer is friction. Moving money is slow, expensive, and operationally risky, so the idle balance is rational. Atomic settlement has the potential to delete that friction. If a corporate has $100 million sitting in an account for an hour, and it can move into a tokenized money market fund and back with no settlement risk, it will. If you meet this with skepticism, then ask yourself if you were advising a large corporate on liquidity, under what scenario would you recommend they leave that money idle? Honestly its hard to find someone with a good answer to that!

Now lets follow the consequence inside the bank. If stable idle balances disappear from the large corporate portfolio, the funds transfer pricing models that allocate value across every business line stop describing reality. The deposit franchise economics that subsidized commercial banking for a century get repriced, and this is already visible in the data. Non interest bearing deposits at US banks have fallen more than 30% since the March 2022 peak, before tokenized alternatives paid a single basis point of yield. Money market funds hold $7.6 trillion. A 2026 Tradeweb survey found 25% of corporate treasurers moderately or very interested in tokenized money market funds, in a market where fewer than 5% of treasurers held any digital asset the year before. I’m afraid that the repricing is happening whether banks act or not. Late fees went away for Blockbuster too, the difference is Netflix replaced them with something bigger.

That’s the category error I’m worried about in most bank tokenization programs. They’re project programs, run by project people, scoped as project decisions. But actually the right question list looks nothing like a list of project milestones. Which of our revenue pools exist because settlement is slow? Which client behaviors change when money moves like information? What replaces the income we lose, and are we building toward those pools or defending the old ones? Thats a war game about the identity of the institution, and I’m not sure how many banks are running it.

When the customer is an agent

There’s a second behavior change stacked on top of the first, and I think its has the potential to compound everything above. The economic actors that operate on these rails will increasingly not be humans.

Take the owner of ten dry cleaners. They’re never going to learn what a tokenized deposit is, and really they don’t need to. They will tell an AI agent to optimize their cash. So pay suppliers as efficiently as possible, collect receivables as fast as possible, and make sure no dollar sits idle when it could be earning. The agent executes against those instructions continuously, and an agent has no sentiment, no inertia, and no relationship with a branch manager. It will sweep every idle balance every hour of every day, because thats literally what it was told to do. Small businesses, the customers with the least treasury sophistication, have the most to gain from this, which inverts the usual adoption logic that says complexity arrives at the top of the market and stays there.

I think we’re starting to see glimpses of this now. Mercury has shipped a command line interface to the bank account, along with a server built for AI agents to call it, and if there’s a command line, there will be agents driving it. I’ve connected an LLM to QuickBooks and a bank account to reconcile transactions myself, it works today. And the killer app may not come from a bank or a fintech at all. SAP sits in the back office of essentially every Fortune 500 company, and every receivable in that network is someone else’s payable. If SAP nets those flows across its installed base on tokenized rails, the volume that banks believe they intermediate gets settled before it ever touches a bank. Banks like to think they sit at the center of corporate payment flows. The ERP vendors actually do.

The pattern is not new. Every new technology gets used first to do the old thing faster, and then someone does a net new thing. Mobile phones were portable phone calls for a decade before nobody used them for calls at all. It feels like tokenized money is in its faster phone calls phase, cheaper cross border, faster settlement, and the net new phase, autonomous treasury, machine speed liquidity, conditional payment flows wired into physical logistics, is where the new revenue pools form. Vantage Bank’s POC work this year surfaced what that looks like at street level when a Texas trucking company that pays drivers the moment a delivery is confirmed in Mexico told the bank this lets them retain their best drivers, and a manufacturer said faster supplier payment wins them better suppliers. I love that because its a competitive position story rather than a cost story, and its exactly the kind of value a project committee never finds because no customer knew to ask for it.

The existential math

The cleanest test for whether a bank should treat this as existential is to compare it against the product misses that weren’t. Plenty of large banks sat out P2P payments for years while Venmo took the market, then spent the better part of a decade clawing it back through Zelle, and it stung, but it was survivable, a missed feature, and the banks carried on. Business models don’t miss you the way products do. If I were on a bank board, then the question about tokenized money I’d be asking management is whether this one is survivable if they’re wrong? I’m not sure it is.

Jamie Dimon is a good example. He has been publicly skeptical of crypto for a decade, and for that same decade JPMorgan has been building Kinexys, JPMD, and the Tokenized Collateral Network anyway. Skepticism and a hedge are not contradictory, in fact they’re a pretty rational pair. If there is even a 10% chance the bears are wrong about this, you cannot be out, because the downside of being out is being the next Blockbuster.

And the uncomfortable structural fact is that the banks with the most to lose are not all moving. The mega banks are building, and four of them are now standing up a shared tokenized deposit network with The Clearing House, targeted for 2027. The super regionals are joining consortiums like Cari Network and Project Keystone, often both at once, which tells you they’re hedging across rails because they can’t afford to bet on one. But the middle is waiting, and the long tail of community banks will get whatever their core vendor ships, whenever it ships. Meanwhile the combined market value of the Big Three core vendors has fallen from roughly $140 billion to about $60 billion in two years, which means the layer those banks are waiting on is itself under a bit of stress. A bank whose tokenization plan amounts to “whatever the core vendor ships” has outsourced its future to a balance sheet under pressure.

I think banks end up choosing among three plays. Either become an infrastructure provider, the financial market infrastructure of the tokenized system, or become the white glove aggregator that assembles tokenized products into something customers actually want and will pay for, or become a specialist liquidity provider into the new flows. All three feel viable. What is not viable is treating the choice as a project backlog item and revisiting it next planning cycle, because the FTP model ain’t going to wait for the roadmap.

Netflix makes far more money now than it ever did renting videos. The revenue pools that died were replaced by bigger ones, captured by the firm that read the shift as a change in what the customer was buying rather than a change in how the tape got delivered. I reckon the same will be true here. Settlement revenue, float income, and correspondent fees will shrink, and machine speed treasury, tokenized asset servicing, agent facing financial products, and the infrastructure underneath all of it will grow. The money doesn’t disappear, it moves to whoever rebuilt around the new behavior.

Blockbuster knew about Netflix the whole time. It watched the subscription model take its late fees, it watched streaming take the rest, and in 2000 it passed on buying the company for $50 million. Knowing wasn’t the constraint. The constraint was that it kept filing an extinction level business model shift under new distribution formats, one more project decision in a quarterly review.

If this resonated, the earlier pieces in this arc are Tokenization Is Not a Product and The End of Idle Money.

References

Tokenization and institutional adoption

• Larry Fink at the NYT DealBook Summit, December 2022 (tokenization of securities)

• BUIDL becomes largest tokenized Treasury fund, April 2024 (CoinDesk)

• BUIDL first to cross $1B, March 2025 (CoinDesk)

• DTCC Turns Tokenization into Reality: live production trades, July 15 2026; October launch targeted

• JPMorgan Kinexys / Tokenized Collateral Network

• Citi Institute GPS, Tokenization 2030 (June 2026): $5.5T tokenized securities by 2030

• BCG × ADDX, on-chain asset tokenization sizing ($16T by 2030)

The Blockbuster record

• Netflix corporate history: pay-per-rental 1998, subscription September 1999, per-title pricing dropped 2000 (Britannica)

• Blockbuster ends late fees, effective January 1 2005 (NBC News, Dec 2004)

• Blockbuster late-fee revenue ~$800M / ~16% of revenue in 2000 (Old Dominion University case study)

• Blockbuster passes on buying Netflix for $50M, 2000 (Inc., per Marc Randolph)

Deposits, treasurers, and funding

• FDIC Quarterly Banking Profile, non-interest-bearing deposit series (FRED)

• ICI money market fund assets, weekly series

• 2026 Tradeweb ICD Portal client survey (corporate treasurers on tokenized MMFs)

Settlement and policy

• BIS + IIF, Project Agorá: a shared programmable platform for wholesale cross-border payments (May 2026) and press release: work advances to real-value testing

• GENIUS Act, Pub. L. 119-27; CLARITY Act (119th Congress)

Bank, vendor, and tooling moves

• Four major US banks and The Clearing House plan shared tokenized deposit network (June 2026)

• Cari Network: regional banks build tokenized deposit network on ZKsync (March 2026)

• FIS and six banks launch Project Keystone tokenized money network (April 2026)

• Mercury API, CLI, and agent-facing MCP server

• Vantage Bank on stablecoins vs tokenized deposits (ABA Banking Journal podcast, Sept 2025)

• Core vendor market caps: Fiserv, FIS, Jack Henry

Its worth pausing here, because no bank customer asked for this. And it’s the thread I want to pull on, because customers never ask for rails. They didn’t ask for ACH in 1972 and they didn’t ask for SWIFT in 1977. What customers have always asked for is a small set of jobs that haven’t really changed in a century. They want to pay at the moment the work is verifiably done, keep cash earning until the moment it’s needed, know what landed on the other side of a border and when, move money between their own entities at any hour, and if you could, please make reconciliation do itself.

The thing to remember is that legacy rails have made those jobs expensive to do well, and while we’re at it, let’s just say it for those at the back, banks earned the spread on that expense. The float on idle cash, the FX margin on cross border payments, the intraday credit on trapped liquidity. All that friction is the franchise.

The way I think about it, that single fact explains almost everything about the order in which this market is moving. A bank that solves these jobs is in fact cannibalizing its own spread. A non bank that solves them takes the relationship. So the solving is being done by non banks first, the largest banks second, and everyone else, well it looks like they’re waiting for a customer request that isn’t going to arrive in a form they recognize.

Start with the jobs, not the technology

I believe tokenization is really interesting for one particular structural reason and that is it puts value with settlement finality and data in the same object. That sounds abstract until you map it against why B2B payments have resisted thirty years of point solutions. Erin McCune, who has spent a career in the trenches of B2B payments, argues the field doesn’t have a problem, it has twenty three, clustering into six main categories. Interoperability, trust, data, cost, working capital, and manual process. I really like her heuristic that a vendor that fixes one category leaves the other five untouched, and the buyer has no reason to switch, which is why the most impactful interventions address several categories at once and also why they’re so rare. A primitive that carries finality and remittance data in the same token cuts across four of the six at once, which is why I think this wave behaves differently from the e-invoicing and supply chain finance waves that came before it.

Run the old jobs through that primitive and each one becomes a product somebody can ship. Conditional payment, where funds release on verified delivery, is being piloted in freight right now, TCS and PayPal announced in March that PYUSD will settle trucking invoice flows they expect to exceed $1 billion this year. Continuous treasury, where balances sweep automatically between transaction accounts and tokenized money market funds, ends the idle balance as a concept. And with net interest income making up roughly 60 percent of retail bank revenue globally, that is an income statement event, not a feature. Cross border settlement with a stable value leg removes pre-funding. The self reconciling payment already exists, SAP’s Digital Currency Hub pays supplier invoices in USDC or PYUSD straight from the ERP payment run and hands back a camt.053 statement, so the payment arrives looking like a bank statement and books itself. PayPal paid an EY invoice this way back in September 2024!

None of this creates new customer needs. Think of it more as removing the excuse for not meeting the old ones.

The demand arrives through vendors, not through customers

I’ve talked to many bankers who say their customers aren’t asking for this. Honestly, I think bankers who report no client demand are watching the wrong door. A corporate treasurer is not going to walk into a branch and ask about tokenized deposits. That treasurer is going to adopt these capabilities inside the tools they already use, often without registering that anything monetary has changed.

In April, Kyriba and Circle embedded USDC execution directly into the treasury management system, agent orchestrated, settling cross border and intercompany payments around the clock, routed through the customer’s existing approval workflows and audit controls. It ships to customers this month, the same month as that AFP certificate. Ripple paid $1 billion for GTreasury in October, a treasury platform that processed roughly $12.5 trillion in payment volume in 2025, and has already added digital asset accounts to it. SAP is doing the same thing at the ERP layer.

Look at what this means from the corporate customer’s seat. Instant supplier settlement shows up as a feature of the ERP. The 24/7 sweep belongs to the treasury system, the instant payout to the payroll platform. Nothing in that experience says tokenized deposit, nothing says crypto, and nothing involves asking the bank for permission. I reckon every one of those features will move a balance or a fee from a bank. By the time the change is apparent to the average banker, those flows will already be well on the way to moving.

Charters second

The second group through the door is buying its way into the regulated perimeter, and the pace has changed character. The OCC received 18 de novo and conversion applications in 2025, nearly as many as the previous four years combined. On a single day in December, the OCC granted conditional national trust charters to Circle, Ripple, Paxos, BitGo, and Fidelity Digital Assets. Anchorage, which has held a national charter since 2021, now issues Tether’s US regulated stablecoin. Kraken got a limited purpose Fed master account in March, the first crypto firm with direct access to Fed payment rails. Erebor opened in February as the first de novo national bank of this cycle with roughly $625 million of capital. And in May, SoFi launched SoFiUSD, the first stablecoin issued by a US national bank inside a consumer app, in front of about 15 million members.

The May executive order asking the Fed to decide completed account applications within 90 days, followed a day later by the Fed’s own proposal for a limited purpose payment account tier, turned what was a queue into a conveyor. Five years ago Anchorage was the only firm that had assembled charter, regulatory status, and a path to settlement access from outside the banking system. Now it’s a pattern with a playbook.

Banks last, and only the largest

The largest banks are not ignoring this. They’re rebuilding the rails privately, for themselves. JPMorgan’s Kinexys has settled more than $1.5 trillion cumulatively and its deposit token now lives on Base, a public chain, restricted to institutional clients. Citi runs Token Services. BNY launched tokenized deposits in January with ICE, Citadel Securities, and Circle among the first users. Goldman is spinning its digital asset platform out into industry ownership. And in the clearest signal yet, JPMorgan, Bank of America, Citi, and Wells Fargo, along with a dozen others, are building a shared tokenized deposit network operated by The Clearing House, targeting the first half of 2027.

Two details in that announcement deserve more attention than they got. The first is that Bank of America’s head of payments conceded that clients are “not beating down the door” for tokenized deposits. The network is being built anyway, ahead of demand, I suspect because the people building it understand the vendor dynamic described above. The second is scale. Tokenized deposit flows at the largest banks are already estimated above $4 trillion a year, against roughly $300 billion of stablecoins outstanding. The volume story is bank money moving onto new rails, concentrated at the top, not crypto displacing anything.

It feels to me that there’s an unsolved seam running through all of it. A JPMorgan token and a Citi token are claims on different balance sheets. The network design does not yet specify how one bank’s token becomes another bank’s token at par, and nobody owns the liquidity that has to stand behind that exchange. The two tier monetary system solved this a century ago with reserves at the central bank. The tokenized version hasn’t solved it yet, and whoever does will own the most valuable piece of the new plumbing. Hold that thought.

The cascade to the long tail

Now lets follow the thread to its end. There are about 4,300 banks in the United States and roughly 3,900 of them are community banks. Their deposit economics have been moving before any of this shipped. Non interest bearing deposits at US banks fell from $5.5 trillion at the March 2022 peak to $3.85 trillion three years later, a 30 percent decline that happened before stablecoins paid anyone anything. The friction was already eroding and now I think tokenization will just remove what’s left of it.

In May the FDIC published a forensic study of the 2023 runs built from the actual core deposit and wire systems the agency seized at SVB, Signature, and First Republic. The headline speed is bad enough, two banks losing roughly half their deposits in three business days. The finding that should worry every asset liability committee sits lower down, the depositors who ran emptied their business operations accounts completely, the category every ALM model treats as sticky, leaving little to nothing behind. At Signature, escrow style balances that beneficial owners could withdraw on demand fell 83 percent in two business days.

The stickiness was never really about loyalty. It was actually friction, and the FDIC has now documented what happens when frictionless redemption meets a reason to move.

Where do those deposits go when they leave? The New York Fed’s February staff report on stablecoin disintermediation traces it, deposits that migrate to stablecoins re-pool at a small number of partner banks that hold them as reserves rather than lending them. A separate Fed Board note from December was even more blunt, deposit reliant community banks facing this substitution may be forced to contract lending more sharply than their larger peers. The credit contraction lands in the communities the long tail funds.

And the long tail’s tokenization roadmap is whatever its core vendor ships. Here the news is a bit grim for duller reasons. The combined market value of Fiserv, FIS, and Jack Henry has fallen from roughly $140 billion two years ago to about $60 billion today. Fiserv’s FIUSD stablecoin, announced a year ago, is now slated for July. FIS has made some moves with a digital currency platform that has completed seven proofs of concept. Jack Henry is routing the problem to a third party integration. None of it really feels like its production infrastructure a community bank can deploy today, and the vendors selling the roadmap are fighting for their own lives.

So yes, the signal arrives in a form legacy thinking struggles to parse. The community bank CEO is waiting for a customer to walk in and ask about tokenized deposits. The actual request arrives as a commercial customer’s ERP offering instant supplier settlement, a treasury platform sweeping the operating balance at 4:59pm on a Friday, a payroll provider offering instant tips. Each one looks like a vendor feature. None of this looks like crypto. Every one moves a balance or a fee, and by the time that demand is understood, the deposit will have moved and the relationship has a new front end.

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The market structure now forming does have a familiar shape. The Clearing House network gives the largest banks a shared rail they own. The regional consortia, like the Cari Network with its c$800 billion of combined assets, give the upper middle a hedge. The default outcome for everyone else is access to rails owned by their largest competitors, on their competitors’ terms. We have run this experiment before. RTP and Zelle are owned by the big banks, and the community banks answered by going to FedNow, which now has over 1,700 participating institutions, rather than clear over a rival’s infrastructure. I expect the same politics to play out here, and I think the question of whether the long tail gets a neutral settlement asset, rather than settling over a competitor’s balance sheet, will become one of the defining fights of the next three years.

But we all know politics is slow and the flows are not, so the practical question is what a bank below $10 billion in assets does now, before any of that resolves. I think the answer is unglamorous but within reach, you have to receive before you issue. Stand up a wallet. Accept the inbound stablecoin and token flows that are already arriving from your customers’ platforms, earn the conversion and FX revenue at the point of receipt, and keep the redemption function, because converting tokenized value back into spendable bank money is a banking function whoever moves the asset. A sidecar ledger next to the existing core makes this a bounded project rather than a core replacement, which matters if your core vendor’s roadmap is a press release. Issuance, if it ever makes sense for a $2 billion bank, comes after acceptance, and probably only ever through something shared.

So if you run a bank and you’re still waiting for the customer to walk in and ask for this, know that waiting is itself a decision. Everyone upstream of you is moving, the vendor are shipping features, there are new charters, the largest banks are building a network they own between them, and each of them, as it moves, will take balances that you used to earn on. The only choice is whether what replaces the friction runs over your rails or over somebody else’s, and I believe that choice is probably on a clock.

I do think the decision gets easier to make once we’re honest about what the spread always was. The spread was never a service the bank sold, it was the price of doing an old job the slow way, and the customer only paid it because there was no faster road. There is a faster road emerging now.

I really doubt the friction is coming back once it’s gone. The jobs were never really the bank’s to keep, only to do.

References

B2B payments framing

• Erin McCune, Forte Fintech Field Notes: B2B Payments Don’t Have a Problem. They Have Twenty-Three. (April 2026)

Vendor and treasury layer

• Kyriba and Circle bring USDC capabilities to enterprise treasury (April 2026)

• Kyriba brings AFP, J.P. Morgan Asset Management and Circle into a single AI-orchestrated treasury platform

• SAP Digital Currency Hub: B2B payments with stablecoins

• PayPal completes its first business transaction using stablecoin (Bloomberg, Oct 2024)

• TCS Blockchain and PayPal drive financial innovation in trucking (March 2026)

• Ripple breaks into corporate treasury with GTreasury acquisition (Oct 2025)

• Ripple Treasury launches first TMS with native digital asset capabilities (April 2026)

• McKinsey Global Banking Annual Review

Charters and the regulated perimeter

• OCC grants conditional approvals: Circle, Ripple, Paxos, BitGo, Fidelity (Dec 2025)

• Tether launches US-regulated USAT stablecoin via Anchorage Digital (Jan 2026)

• Kansas City Fed approves limited-purpose account for Kraken Financial (March 2026)

• Erebor Bank receives national bank charter (Feb 2026)

• SoFiUSD becomes the first stablecoin issued by a US national bank on a banking platform (May 2026)

• Executive order: Integrating Financial Technology Innovation Into Regulatory Frameworks (May 2026)

• Fed payment account proposal analysis (Mayer Brown, May 2026)

Bank rails

• Kinexys surpasses $1.5 trillion in cumulative volume

• JPMD deposit token live on Base for institutional clients

• BNY launches tokenized deposits (Jan 2026)

• Four major US banks and The Clearing House plan shared tokenized deposit network (June 2026)

• Citi: why bank tokens could boom

• Cari Network: regional banks build tokenized deposit network on ZKsync (March 2026)

• DefiLlama stablecoin market data

Deposit economics and the long tail

• FDIC staff study: Dissecting Depositor Flight (May 2026)

• NY Fed Staff Report 1185: Stablecoin Disintermediation (Feb 2026)

• Fed Board FEDS Note: Banks in the Age of Stablecoins (Dec 2025)

• FDIC Quarterly Banking Profile, Q1 2026

• Noninterest-bearing deposit series (FRED/FDIC QBP)

• Fiserv stablecoin arrives next month (June 2026)

• FedNow vs RTP participation

For digital money, I think this intuition is wrong, and dangerously so. Digital money does not exist outside the systems that operate it. The rail doesn’t just carry the money, it creates and constrains the monetary properties we care about. Par value, redeemability, finality, availability. These aren’t attributes of the token. They’re behaviors of the stack underneath it.

After 25 years inside various parts of banking infrastructure I can’t help think this is the framing the whole tokenization debate tends to miss. We passed the GENIUS Act in July 2025 and built an entire regulatory category around the quality of the train, 1:1 reserves, no rehypothecation, full disclosure, an enforceable right to redeem at par. All necessary. And all of it aimed at the balance sheet, while the risk has migrated to the tracks.

Par value is a property of the stack

I find it really helpful to think about the mechanism, because the mechanism is everything.

When you redeem a stablecoin, three separate systems have to work in sequence. First, a blockchain transaction moves your tokens back to the issuer. Second, the issuer sells Treasuries to raise cash, an off chain trade that settles T+1 and flows through broker dealers with finite balance sheets. Third, the banking system transfers deposits to your account. The token’s claim to be “worth a dollar” is really a claim that all three layers will function, at the same time, under stress.

The GENIUS Act addresses the first order question, whether the assets are there. So solvency, but solvency is necessary and not sufficient. The reserves also have to be convertible into bank deposits fast enough to meet redemptions, and that depends on the market layer working. In March 2020, foreign investors alone sold $417 billion of Treasuries in the dash for cash, and the dealers who intermediate that market were overwhelmed. Pricing dislocations in the deepest, safest market in the world. The stablecoin market today sits at roughly $300 billion, with forecasts of $2 to $4 trillion by 2030. At today’s size, a full scale redemption run would already be a meaningful Treasury selling event. At 2030 scale, it would be a market functioning event, hitting dealers who already operate near their supplementary leverage ratio floors.

And it runs both ways. Fear that the market layer might seize creates the incentive to redeem first, which stresses the market layer. Anyone who has watched a deposit run knows this loop, the expectation of illiquidity manufactures the illiquidity.

Then there’s the third layer, the one it feels like that bankers are least equipped to price, and that’s the technology. Stablecoins are ledger entries in smart contracts on blockchains the issuer does not control. The issuer controls the contract, the upgrade keys, the freeze function. It does not control whether the chain processes transactions at all. And liveness is an economic property. A chain halt suspends the redemption and arbitrage mechanism that holds the peg, the pause itself can create the discount, and the discount feeds the run.

If that sounds a bit theoretical, it isn’t. In October 2025, Paxos mistakenly minted $300 trillion of PYUSD, an internal transfer of $300 million with a fat finger on the zeroes, roughly two and a half times global GDP created by a single account with unlimited mint privileges. It was burned within about 20 minutes and nothing was exploited. But the lesson stands I think, the code path existed, and no reserve requirement in any statute would have stopped it. And in March 2023, when Silicon Valley Bank trapped a portion of Circle’s reserves, USDC traded down to 87 cents in the secondary market. The reserves were overwhelmingly intact, what failed was confidence in the conversion machinery over a weekend. The train was fine. The tracks were closed.

The oldest problem in American banking

If money whose value depends on redemption infrastructure sounds novel, it’s the oldest problem in American banking.

During the free banking era, before the National Banking Acts of the 1860s, the US ran on privately issued banknotes. A dollar note from a solid Boston bank and a dollar note from a distant country bank were both “dollars,” but they did not trade at the same price. Merchants consulted banknote reporters, printed tables of discounts, because a note’s value depended on the cost and credibility of getting it redeemed. The further you were from the issuing bank, the deeper the discount. Par was not a property of the paper. It was a property of the redemption network behind the paper.

New England solved this with infrastructure, not asset quality. The Suffolk Bank system created a clearing arrangement that made member banknotes redeemable at par across the region, and notes inside the network traded at face value while notes outside it did not. Same trains, with better tracks, and different money.

It feels like stablecoins are replaying this dynamic with the labels changed. USDC at 87 cents was a banknote discount, quoted on Coinbase instead of in a Chicago broadsheet. The secondary market is today’s banknote reporter, continuously pricing not the reserves but the redemption stack. I think the free banking era also tells us where this goes. The discounts ended when the redemption infrastructure was mutualized, standardized, and eventually absorbed into a central bank. Which points at the question nobody in the stablecoin debate wants to own, whether issuers eventually need access to the Fed’s balance sheet. The status quo keeps them outside the discount window. Every option that makes them safer pulls them further inside the perimeter.

The neutrality trade

The issuers have understood all of this faster than their regulators, and you can read their conclusions in their infrastructure decisions.

Stripe and Paradigm are building Tempo, a payments first chain targeting 100,000 transactions per second with no native token, gas payable in stablecoins. Circle is building Arc, where USDC itself is the gas token. Tether is behind Plasma and Stable. These purpose built chains exist for one reason, the issuers concluded they cannot accept liveness risk, validator politics, and fee volatility on neutral public chains they don’t control. If the rail defines the money, own the rail.

But look at what they’re giving up. The pitch for public blockchains was always credible neutrality, no single party can censor you, halt you, or change the rules. The purpose built chains trade that neutrality away for control, every one of them run by the issuer or a consortium of the issuer’s friends. Will the market value that trade? I think the honest answer is that nobody knows yet, and the answer probably differs for a corporate treasurer and a crypto native fund.

Meanwhile the incumbents are making the identical trade from the opposite starting point. Citi moves nearly $6 trillion in payments daily, and Citi Token Services now runs tokenized dollar and euro transfers integrated with 24/7 USD clearing, fully embedded inside the bank’s existing stack. Permissioned, controlled, and pointedly not marketed as blockchain at all. The clients using it are moving money on weekends for M&A closings and e-commerce settlement, and most of them never hear the word blockchain. The issuers are building banks’ control models onto crypto rails, the banks are building crypto’s settlement properties into bank rails, and both have concluded the same thing. Control of the track is the product.

The last deterministic act

The other story running through finance right now is AI agents, and on the surface it has nothing to do with stablecoin plumbing, but I’m increasingly convinced it’s the same story.

Every conversation about agentic AI in financial institutions circles the same discomfort. These systems are probabilistic. Ask the same question twice, get two different answers. Ask a room of practitioners who uses AI daily and every hand goes up; ask who would trade a $50 million corporate loan on its output and the hands come down. FINRA is already watching agents hallucinate decade old settlement rules, T+7 in a T+1 world, and is fielding questions about clients bringing their own agents to the firm’s front door. And there’s a systemic version, if institutions run similar models at similar speeds, correlation and speed become new risk variables, and you cannot fight a machine speed failure in human time.

The industry’s emerging answer is to make the guardrails deterministic even when the intelligence is not. Compile regulation into machine checkable rules. Wrap agent actions in verifiable receipts and zero knowledge proofs. Constrain the probabilistic layer inside a deterministic envelope.

Now connect the two halves. As the decision layer of finance becomes probabilistic, the settlement layer becomes the only place where certainty still lives. An agent negotiating and executing payments at machine speed cannot wait for T+1 batch settlement, cannot tolerate a chain halt, and cannot resolve disputes over the phone. It needs settlement that is instant, final, and cryptographically verifiable, because the deterministic settlement record is the ground truth that makes the probabilistic activity above it auditable at all. I’d posit that deterministic settlement is about to become the scarce asset in a probabilistic financial system. That, more than weekend M&A, is what the new rails are for.

Pricing the tracks

Pull the threads together and I think the pattern is hard to miss. The value propositions everyone celebrates, 24/7 availability, instant finality, programmability, live in the settlement layer. The risks everyone worries about, liveness, treasury market bottlenecks, mint bugs, correlated AI models, also live in the settlement layer. The value and the risk have both left the token and moved into the rail, and our regulatory architecture, our diligence frameworks, and most bank strategy decks are still inspecting the train.

For bankers, “should we issue a stablecoin” is probably the wrong question. I think the better question is which settlement stacks your clients’ money will depend on in five years, and what your position is on those tracks. For investors, the companies worth backing are the ones becoming the rail, the settlement, verification, and control infrastructure that everything above it will have to trust, rather than the ones putting another token on somebody else’s.

The free banking era ended with the banks that owned the clearing system setting the terms for everyone else. That’s the epitaph worth writing down now! Money is not an object that rides the rails, the rails are what make it money.

Nobody ever paid much attention to the tracks. That was the point of them. It’s also why they’re about to become one of the most valuable things in finance.

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References

Stablecoin plumbing and risk

• The Hidden Plumbing of Stablecoins: Financial and Technological Risks in the GENIUS Act Era — MIT Digital Currency Initiative, February 2026

• The Global Dash for Cash in March 2020 — Liberty Street Economics, Federal Reserve Bank of New York

• Paxos mistakenly issues $300 trillion of PayPal stablecoin — Bloomberg, October 2025

• Explained: The Paxos PYUSD Incident — Halborn

• Stablecoin market capitalization — DefiLlama

Purpose-built settlement chains

• The Rise of Stablechains: Plasma, Arc, & Tempo Explained — Across

• Stripe and Paradigm-backed Tempo launches advisory unit — Fortune, April 2026

Incumbent rails

• Citi integrates Citi Token Services with 24/7 USD clearing — Citigroup press release

• Big, Small and Everything in Between — Citi Perspectives, 2026

I wonder if we might reframe it though. Perhaps a better question might be what product OUSD actually is, once you strip away the various chains and the governance language and look at what a business receives when it signs up.

So here is the proposition in a nutshell. You can mint and redeem at no cost, at any volume. You transact from the balance. And nearly all of the income earned on the reserves backing your balances flows back to you, less a small management fee. A dollar balance you make payments from, that pays you roughly the Treasury bill rate.

Of course, most bankers would have a name for that product. It’s an interest bearing corporate operating account. And the entire architecture of American banking, from a Depression era statute to a clause buried in last year’s stablecoin law, has been organized around making sure that product does not exist.

What 140 logos are actually asking for

Let’s start with the arithmetic, because I think the arithmetic is the product here. A stablecoin’s distributable income is fixed by what its reserves earn, and reserves earn as a function of dollars held over time. Yield accrues to float, not to flow. That sounds like it should kill the payments use case, but at corporate scale it doesn’t, because even transactional money has dwell time.

Ok, so let’s run the numbers on a back of an envelope for a treasurer pushing say, $1 billion a day through OUSD, with an average four hour gap between minting and the supplier’s redemption. That’s a time weighted balance of roughly $167 million, continuously. At, I dunno, a 4% reserve rate, that’s about $6.7 million a year, earned on money that today sits in settlement accounts earning nothing. This is the type of volume those 140 partners are doing, and the treasurer hasn’t repositioned anything into an investment. The same operational cash does the same job, except someone now pays rent on it.

Now in that example every supplier redeems on receipt, but I’m not sure the data nor the design suggests they will. The existing stablecoin market moved roughly $33 trillion in 2025 on about $300 billion of supply, an average dwell of around three days, and Tether’s $145 billion circulates for years without redeeming. If you do the math on three days then every number multiplies by eighteen. So now a business that does $1 million a day earns $120,000. That’s essentially the entire upper middle market, so we’re not talking JPMorgan's global treasury services desk here, these are the customers of super regionals and regional banks.

I think the word partner matters, because the yield follows the partner agreements, not the token. Reserve income accrues to the issuer, and a holder has no claim on it without a contract, that’s true of every fiat backed stablecoin, and GENIUS makes paying a mere holder unlawful in any case. Open Standard’s announcement says partners receive all of the earnings from the reserves, less the management fee. Put those together and the supplier’s position follows. A partner collects a share, a holder on a partner platform may get some kind of platform rebate, and a holder outside the network gets nothing while the income their float generates goes into the pool the partners divide. How that pool is split is the piece Open Standard hasn’t published. But held by a non partner, OUSD works exactly like the model it set out to replace, someone else keeps the interest on your money. Tether keeps everyone’s float income. Open Standard, on its own description, keeps the outsiders’ and pays it to the insiders.

That’s the design insight inside Open USD, and I reckon it’s why the partner list looks the way it does. Circle’s business model has the interest on roughly $73 billion of USDC reserves. Tether keeps the interest on $145 billion. Open Standard inverts it: the float income goes to whoever brings the balances, which answers the question that has hung over stablecoin distribution from the start. Why would Stripe or Shopify spend the next decade making someone else’s issuer rich? The OCC expects payment stablecoin issuance could reach $500 billion in 2026, and BNY, an Open Standard partner, has said publicly it anticipates stablecoins alone may grow to $1.5 trillion by 2030. Whoever holds the float on that pool collects the income on it. The consortium is a machine for redirecting where it lands.

The float was always the fee

To see why this is a banking story rather than just a crypto story, ask a question that might sound a bit naive, why doesn’t your operating account pay interest?

It’s not the law. Although it was, once. Regulation Q, born in the Banking Act of 1933, flatly prohibited interest on demand deposits, and for decades the corporate operating account paid zero because it had to. Banks and their clients then did what regulated parties always do, they engineered around the rule. The earnings credit rate was the workaround, a soft credit, calibrated to your balances, that offsets your treasury services fees. Functionally interest. Legally never interest. Not even taxable. Corporate cash management has run on this lawful fiction for probably half a century.

Then in 2011, Dodd-Frank Section 627 repealed Reg Q for business checking, and almost nothing changed. Operating balances kept earning zero, or a thin ECR pegged well below market rates, because the constraint was never really the statute. It was the bundle. The operating account is the pricing mechanism for a relationship. So payment execution, intraday liquidity, fraud and disputes, and above all credit. Your revolver is priced against your operational balances, and every treasurer knows what happens to the facility when the balances leave. The float is how the bundle gets paid for. That spread, between the roughly zero you receive and the bill rate the bank earns on your transactional cash, is the deposit franchise.

By the way, it’s also enormous. When Treasury analyzed the stablecoin yield question, it estimated that as much as $6.6 trillion in deposits could migrate out of banks if stablecoins pay interest through the side door, close to 30% of the US deposit base. Look at which deposits are at issue. Savings balances already compete with money market funds, they were always mobile. The money in play here is operational balances, the deposits Basel’s liquidity rules treat as the stickiest and cheapest funding in the system, the ones banks are allowed to assume won’t run. A payment instrument that rebates float makes them portable. That’s is what to play for here.

Regular readers will recognize the territory. In The End of Idle Money I argued that the settlement friction subsidy erodes once money moves at programmable speed, whether or not the yield loopholes get closed, because velocity alone lets capital rotate out of idle balances. OUSD feels a lot blunter than that. It doesn’t wait for velocity to erode the subsidy, it prices the subsidy and hands it back to the customer as a rebate. Erosion has become expropriation, with a partner agreement attached.

OUSD, seen through this lens, is an unbundling. Payments utility at cost, float income returned to the customer, and the rest of the bundle, the credit relationship, the intraday liquidity, the insurance, simply absent. Whether the bundle was worth its price is now, for the first time in fifty years, a question with a competing quote attached.

Congress saw this coming, almost

The GENIUS Act, enacted in July 2025, contains one sentence built for exactly this moment. Section 4(a)(11): no permitted issuer shall pay the holder of a payment stablecoin “any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention” of the stablecoin.

Read it as a drafting exercise and you can see the fingerprints of the last fifty years on it. “Whether in cash, tokens, or other consideration” is an anti ECR clause, written by people who know precisely how banks laundered interest into service credits under Reg Q. And “holding, use, or retention” closes the door I suspect most treasurers would reach for first, the claim that they aren’t holding an investment, merely using a payment instrument. Use is enumerated. So good, Congress anticipated the operating account dressing and legislated against it by name.

But the prohibition hangs on two words, and both feel like they cut in Open Standard’s favor. The first is “issuer”, the prohibition binds nobody else, which is why Coinbase can pay 3.5% on USDC balances today, call it a loyalty reward, and fund it from its agreement with Circle, which hands Coinbase all of the reserve income on USDC held on its platform and half of the rest, worth $908 million in 2024, more than half of Circle’s revenue. Neither leg of that arrangement violates the text. The second is “solely”, if a payment to a partner is consideration for a bundle, integration commitments, distribution, acceptance building, governance participation, then it is not solely for holding or use, and the prohibition by its terms doesn’t reach it. Open Standard’s partner agreement could easily be an engineering exercise around one adverb.

The regulators know. The OCC’s proposed rule, issued in February 2026 with 211 open questions attached, adds a rebuttable presumption against conduit arrangements, but read the presumption carefully and it’s definitely drafted for the Circle to Coinbase chain, it fires only when the issuer pays an intermediary solely for holding and the intermediary pays holders solely for holding. A well drafted partner agreement breaks the first leg at the source. What remains then is case by case anti evasion review, where substance beats form, and where a partner whose compensation tracks balances rather than services will struggle. The OCC concedes it hasn’t defined “use” and has asked for comment on whether transaction based rewards fall inside the ban. That undefined word is really where this fight now lives.

Congress, meanwhile, is bidding to define it first. The CLARITY Act, the market structure bill that cleared Senate Banking 15-9 in May, nearly stalled in markup on exactly this question, and the Tillis-Alsobrooks compromise that got it through draws the line in statute, payments that function like deposit interest are blocked, activity based rewards are permitted. The banking trades objected to that compromise for the same reason a treasurer should study it. At corporate scale, activity based and balance based are the same money measured differently, my four hour dwell back of an envelope arithmetic above is an activity reward that pays the T-bill rate. The bill sits on the Senate calendar waiting for floor time before the August recess. If it passes as drafted, the OUSD partner model gets something close to a statutory safe harbor for use based economics. If the banking lobby wins the floor fight, the ban tightens toward substance over form.

Timing is not just the secret to comedy, it does a lot of work here too. GENIUS doesn’t take effect until January 2027 or 120 days after final rules, whichever comes first. Open USD launches into wet concrete, and 140 companies will have live economics in the structure before the boundary hardens. More than 3,200 bankers have signed the ABA’s letter demanding Congress close the pass through. The awkwardness is that several of the banking industry’s largest names now sit inside the consortium whose economics depend on it staying open. The lobbying coalition against the loophole just lost some of its heaviest members to the other side of the table.

We have run this experiment before

If this feels familiar, it should, I used the same history in The End of Idle Money to make a point about what happens when capital learns it has options. It’s worth one more pass here, because this time the endgame mechanics are the point. In 1977, money market mutual funds held under $4 billion. Reg Q ceilings capped what banks could pay savers while inflation ran past 10%, and Merrill Lynch had just launched the Cash Management Account, a brokerage product that looked suspiciously like a checking account with a market yield. By the end of 1982, money funds held roughly $235 billion, and the deposit base was bleeding out of the banking system toward instruments that arbitraged a yield prohibition from outside the regulatory perimeter.

Money funds were never banned. The endgame was Garn-St Germain in 1982, where Congress handed banks the money market deposit account, a weapon to compete with, and the old prohibition collapsed because it had become a subsidy to the banks’ competitors rather than a protection for the system. Same instinct, different instrument, different decade.

I can’t help but think the stablecoin yield ban is Reg Q’s grandchild and will meet the same fate by one of the same two roads. Either the loophole gets closed hard, which requires legislation that the consortium’s membership is now well positioned to soften, or banks get their own weapon. That weapon has, by now, an obvious name. A tokenized deposit pays a real rate on operational balances while keeping the credit relationship, the insurance, and the regulatory perimeter intact. It is the MMDA of this cycle, and every bank inside the Open Standard tent that is simultaneously building tokenized deposit rails is hedging exactly this bet.

The honest caveats, and why they don’t save the incumbents

Ok, but let’s be real here, consortiums have a graveyard, and it’s chock full of great press releases. Libra’s 2019 logo wall looked unbeatable and produced nothing. And Open USD is at least the fourth yield share coin, so the model has benchmarks. Paxos’ Global Dollar Network launched in late 2024 with 130 plus partners and essentially the same pitch, took 13 months to reach $1 billion, and sits near $3 billion today against Tether’s $145 billion. Agora’s AUSD is at roughly $181 million. USDF, the bank consortium version, is dead. A revenue share alone demonstrably doesn’t move balances. Nearly every marquee OUSD partner runs a competing strategy, Stripe owns Bridge, Coinbase’s economics remain tied to USDC with the commercial agreement reportedly up for renewal in August, and half the banks on the list are building the tokenized deposits I just described. Membership is additive, not exclusive. Dragonfly’s Rob Hadick put it plainly:

consortiums are hard and they break easily. OUSD may well end up as the best marketed letter of intent since Libra.

But price discovery doesn’t need the challenger to win, it only needs the quote to exist. The first time a corporate treasurer earns $6.7 million on float that previously earned nothing, the number goes into every treasury RFP in that sector, and the banks across the table have to answer a question they have never had to answer, what, exactly, am I being paid for the use of my operational cash? The ECR conversation stops being a fee negotiation and becomes a rate negotiation. That repricing happens whether OUSD reaches $500 billion or stalls at Global Dollar’s $3 billion, because the offer is now public and the arithmetic is not complicated.

And the repricing does not land evenly. Money center banks can absorb thinner deposit margins and build the tokenized rails to compete. Specialist banks can price the whole relationship deliberately. The banks in the middle, funded on corporate transaction balances they assumed were inert, holding loan books priced against funding costs that are about to become a negotiation, are the ones for whom the operating account franchise was doing the most work. Fewer of them exist every year already. You have to believe this accelerates the sorting.

The operating account was never free. The price was deducted from the yield before the customer ever saw it, which is why nobody negotiated it for fifty years. OUSD’s real contribution might end up being less about the coin, and more about it’s basic arithmetic. Every treasurer can now put a number on what their float is worth to someone else, and no treasurer who has seen that number will easily unsee it.

Banks may not lose the operating account over this, but they’ll start paying for it.

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References

Previously on Atomic Settlement

• The End of Idle Money, March 2026: the settlement friction subsidy, the 1980s rhyme, and why closing yield loopholes doesn’t solve the funding problem

• The Orchestration Layer, June 2026: where value capture goes once rails and instruments commoditize

Open Standard / Open USD

• Introducing Open USD, Open Standard announcement, June 30, 2026

• Circle shares sink 16% after Open USD reveal, The Block, June 30, 2026

• OpenUSD faces steep uphill battle for adoption, CoinDesk, June 30, 2026

• Open USD’s biggest challenge isn’t Circle or Tether, it’s history, PYMNTS, July 1, 2026

• Why an open standard will win the stablecoin race, Christian Catalini, Forbes, June 30, 2026

Legislation and regulatory sources

• GENIUS Act, S.1582, 119th Congress, Section 4(a)(11)

• OCC Issues Proposal to Implement the GENIUS Act, Latham & Watkins, March 2026

• The Stablecoin Yield Debate, Congressional Research Service

• Circle, Coinbase, and the Prohibition on Interest Under the GENIUS Act, Columbia Law Blue Sky Blog, December 2025

Deposit economics and industry positions

• Closing the Payment of Interest Loophole for Stablecoins, Bank Policy Institute

• More than 3,200 bankers urge the Senate to close the stablecoin loophole, American Bankers Association

So Vantage, with the Wyoming crypto bank Custodia handling the stablecoin issuance and the onchain machinery, built a token that is two things at once. Held by a member bank it is a deposit, sitting on a balance sheet, FDIC insured. Sent to an outside wallet the same token becomes a stablecoin, reserved one for one in cash and short Treasuries. It does not get redeemed and reissued at the border. The one smart contract relabels it as it crosses, and relabels it back when it returns to a member bank, so the customer’s relationship with the bank survives a trip out onto Ethereum instead of leaking to whoever issued the stablecoin they would otherwise have bought. The thing has been running on Ethereum mainnet since the spring, with a wider set of community banks due to join this year.

It really is a clever piece of work, and I definitely tip my hat to the team, but the cleverness is also just worth just slowing down on, because I think it can be easy to miss what the token is actually for.

What the token is really doing

I guess the standard reading is the one I gave above, a bank protecting its deposit base from a cheaper cross border rail. True, as far as it goes, but I think it may miss the bigger thing. What Vantage has built is the first serious attempt I have seen to manufacture the singleness of money privately, without the central bank underneath it.

Singleness is the property that a dollar is a dollar whatever form it takes, that the dollar in your bank account, the dollar in your wallet, and the dollar a stranger hands you all exchange one for one without anybody stopping to check whose dollar it is. There is no exchange rate between a Chase dollar and a Wells Fargo dollar, no haircut for paying in cash. It really is the dullest sounding idea in monetary economics and actually the one the whole system is built to protect, because even a small and recurring wedge between two forms of the same money introduces a friction that gets amplified every time it passes through another transaction. We did not always have it. In the free banking era before the Federal Reserve, private banknotes circulated as bearer instruments and traded at a discount that widened with distance from the issuer, as much as twenty percent in a far enough town, because a note was only worth what the next person believed the issuing bank was good for. The two tier system we built afterwards fixed that. Bank money trades at par because every bank settles with every other bank in central bank money, and a federal backstop sits behind all of it. The central bank is the thing that makes a dollar single.

Garratt and Shin at the BIS gave the tokenized version of this its cleanest statement. Private tokens that circulate as bearer instruments, which is what a stablecoin is, can drift from par, and do under stress. Tokenized deposits that never leave the banking system and settle in central bank money hold par, because the settlement leg does the work. Their prescription was conservative, route the new money through the central bank, and don’t wander back into free banking. Well, I don’t think that is the world GENIUS has actually built, and I think the Vantage token is the evidence.

Look at what it does. Inside the consortium it is a tokenized deposit, the form that holds par. Outside, in a stranger’s wallet, it is a bearer instrument, the form that drifts. It does not sit somewhere between the two models the BIS contrasted, it is engineered to be each one in turn. Vantage is refusing the binary. It wants the bearer instrument’s reach and the deposit’s par at the same time, and it gets there by toggling between them with a smart contract instead of choosing one. That is genuinely clever, but I think we have to just pause here, because what made the deposit side hold par was never the label. It was the central bank settlement leg and the federal backstop underneath it. Strip those out, as you must the moment the token is a bearer instrument in a wallet in Monterrey, and par stops being a property of the money and becomes a promise from Custodia’s reserves. A relabel is not the same as a settlement.

This is the pattern Dan Awrey has written extensively about, and I want to push it one step further than perhaps he does. His argument, across Bad Money and Beyond Banks, is that America keeps minting new forms of money, money transmitters, money market funds, now stablecoins, without the legal backing that makes bank deposits trade at par, and so we keep recreating money that lives on the issuer’s credibility instead of on a public guarantee. He reads it as a failure of the law, a fragmented system that keeps letting new money slip outside the regulatory perimeter, and he grades the current US regime an F. With GENIUS I’m not sure that diagnosis fits any more. I mean this time the omission was pretty deliberate. Congress had the deposit model sitting right in front of it, knew precisely what makes a dollar single, and then wrote a regime that withholds the two things that do it, insurance and central bank access, from the instrument it actually expects to circulate. It’s not so much that the state has failed to guarantee the singleness of the new money, it basically declined to, and left the banks to build it themselves.

I think two rules are doing the declining, and they’re working from opposite directions.

Yield

The GENIUS Act, signed last July, invented the legal category of the payment stablecoin and in the same breath forbade it from paying its holder anything. Section 4(a)(11) bars interest or yield in connection with the holding, use, or retention of the coin, and the drafting is wide enough to catch points and rewards as well as cash, so nobody can dress yield up as something else. Congress did not hide the reason. The Congressional Research Service describes the ban as a way to stop people parking large uninsured balances in stablecoins and pulling deposits out of the banking system, and the American Bankers Association had told the Senate, citing a Treasury estimate, that interest-bearing stablecoins could drag as much as $6.6 trillion off bank balance sheets. That figure is the lobby’s worst case, but the worry was real enough that lawmakers wrote it into the statute.

There is a singleness reading of the yield ban too, and it is the stronger one. A payment stablecoin that pays nothing stays a pure par claim, a dollar in and a dollar out, with no accrual that would make it drift from a deposit dollar or tempt it to behave like a fund share that can break the buck. Keep yield off it and you keep it the kind of thing that can plausibly trade at one. That is more than deposit flight insurance, it is an attempt to protect par.

A bank deposit sits on the safe side of the line. GENIUS excludes deposits from the stablecoin definition outright, including, in as many words, a deposit recorded on distributed ledger technology, and the FDIC confirmed in April that tokenizing a deposit changes nothing about how it is treated or insured. A bank can pay interest on a tokenized deposit the way it always has. A stablecoin issuer cannot pay a cent. So Vantage’s token earns money inside the consortium and earns nothing the moment it leaves. The yield does not travel with it.

Circulation

You would think that settles things in the banks’ favor, and on yield it does. The second rule runs the other way, and actually its the one that decides singleness.

I think we can all agree that a stablecoin is useless if it cannot change hands freely, and changing hands freely means passing between strangers the issuer has never checked. The rules allow exactly that. Under the customer identification proposal that FinCEN and the banking agencies put out in June, a permitted issuer has to identify and monitor the parties who mint and redeem with it directly and owes nothing on whoever holds the coin after that, because secondary transfers happen through a smart contract rather than through the issuer. It still has to freeze wallets on demand and screen for sanctions, but it does not have to know the holders. That freedom is what lets a stablecoin behave like cash, and it is also what turns it back into a bearer instrument, the form the BIS says cannot reliably hold par.

A bank gets none of that freedom for a deposit token. Its obligations sit in the Bank Secrecy Act program that already covers every account it runs, and there is no exemption in there for a deposit just because someone tokenized it. Put a deposit token into open circulation and each new holder is, in effect, a new customer the bank is meant to identify, with a compliance officer personally on the hook and an examiner due every year. Beneath the compliance problem lies a plainer one, and to me, its the singleness problem at its sharpest. A deposit is a named debt to a known creditor, and that name is what the FDIC insures. A bearer token belongs to whoever holds it, with no name attached. You cannot make one token both insured and anonymous, and the more freely a deposit token circulates the less the bank can say who owns it, which wears away the insurance that was the only reason to use a deposit token rather than a stablecoin. The FDIC has not resolved this. It blessed the form, then asked the industry to tell it how pass through insurance is meant to work once these things start moving through third parties, which is a regulator admitting it does not yet know how to keep this kind of dollar single.

So the deposit half of Vantage’s token never leaves home. It works among member banks that know their customers, and only the stablecoin half goes out into the world, stripped of the name, the yield, and the bank relationship that would have held it at par. And here the cross border story stops being a detail and actually becomes the whole point. A dollar issued in Texas that turns into an unnamed bearer instrument the moment it reaches Mexico, redeemable through an issuer a holder in Monterrey has no direct relationship with, is the free banking note discounted in a distant town, rebuilt in Solidity. Whether it trades at exactly one peso equivalent of a dollar everywhere it goes is now a question about the credibility of Custodia’s reserves and the depth of the secondary market, not a question the central bank has already answered. That is singleness left to the market.

The same answer twice

One bank doing this is a bit of a curiosity. Two banks at opposite ends of the industry doing it the same way is, for me, the rules starting to show through.

SoFi put a stablecoin in front of its fifteen million customers in late May, the first issued by a nationally chartered US bank, live in the app on Ethereum and Solana with reserves in cash at the Fed. It pays no interest and carries no insurance, because a payment stablecoin is not allowed to. What SoFi bolted on within weeks was a button to convert it into a tokenized deposit that does pay interest and does carry FDIC cover. Same split as Vantage, drawn differently. Vantage buries it inside one token that changes character at a border, SoFi puts it on the screen as a switch between two products. A community bank with a Mexican payments book and a fifteen million user national app have almost nothing in common, and they have landed on the practically an identical shape, because the shape was never really theirs to choose. The rules drew the line between the dollar that can circulate and the dollar that can pay, and now both these banks have built a hinge across it.

We have done this before

This is Regulation Q with the polarity reversed. For half a century American law capped the interest banks could pay on deposits. While rates stayed low it cost nothing. When rates ran past the cap in the 1970s, savers stopped tolerating a below market return and moved their cash into money market funds, which sat outside the deposit rules, paid the going rate, and spent like a checking account. The cap meant to shield the banks built the industry that hollowed them out, and by the time it was unwound in the 1980s the money funds were a permanent part of the system.

GENIUS caps the new instrument rather than the old one and sends the yield seeking money back the other way, toward deposits and toward tokenized money market funds, which can pay because one is a deposit and the other is a security. The mechanism has not changed. A legal ceiling on what one kind of money may pay leaves the demand for yield untouched and only decides which instrument gets to satisfy it. What Regulation Q never threatened, though, was singleness itself. A capped deposit and a money fund share both still cleared at par against the dollar. The free banking precedent is the one that bears on singleness, and it feels like the one the bearer instrument design reopens.

Where all this goes

The money that wants a return will leave stablecoins for whatever is allowed to pay it, and I think the only live question is what catches it first. The FDIC controls whether banks ever get a deposit token that can really circulate, and the Bank Policy Institute and The Clearing House are already pressing it on exactly that. The SEC controls how fast tokenized money market funds slot into everyday settlement, and that side is moving now. BlackRock’s tokenized fund is near $2.4 billion, and tokenized Treasuries as a whole have passed $11 billion, while the deposit token question is still sitting in a comment file. Whichever regulator opens its lane wider first takes the balances that drain out of stablecoins once the rules are final.

Nobody writing these rules will call it sorting money into lanes, and I’m pretty sure nobody will call it deciding the singleness of the dollar either. On paper they are setting reserve requirements and defining what counts as an account. But add the proposals together and they come to a decision about which forms of the dollar get the central bank and the insurance fund standing behind them, and which forms are left to hold par on the strength of an issuer’s reserves and a smart contract’s promise. As a former Texan, I like that a bank in Texas worked out where that line falls before Washington has managed to say it out loud, which is why its dollar has two sides, one of them inside the system that keeps a dollar single, the other outside it.

Holding a dollar at par was the one monetary problem the state had completely solved. GENIUS hands a piece of it back to the issuers and the code, out at the border where there is no lender of last resort to call. A smart contract can rename a dollar. I’m not sure if we really know if it can stand behind one in the same way.

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References

The bank tokens

• Vantage Bank and Custodia release white paper unveiling “Hazel Network” (PR Newswire, June 2026): one token operating as an FDIC-insured tokenized deposit inside the member-bank consortium and a GENIUS-compliant stablecoin outside it; reference implementation live on Ethereum mainnet since March 2026, with a wider set of community banks due to join. Vantage figures and Shawn Main framing from ABA stablecoin interviews.

• SoFiUSD becomes the first stablecoin issued by a US national bank to launch on a banking platform (SoFi, 27 May 2026); coverage in American Banker. In-app to ~15M members on Ethereum and Solana, cash reserves at the Federal Reserve, with tokenized-deposit conversion (FDIC-insured, interest-bearing) on the near roadmap.

Singleness of money

• Rodney Garratt and Hyun Song Shin, Stablecoins versus tokenised deposits: implications for the singleness of money (BIS Bulletin No 73, 2023): the bearer-instrument versus tokenised-deposit distinction, the free-banking discount precedent, and settlement in central bank money as the thing that holds par.

• BIS, The next-generation monetary and financial system (Annual Economic Report 2025, Chapter III): stablecoins and the singleness and no-questions-asked tests.

• Dan Awrey, Bad Money (Cornell Law Review, 2020): why non-bank monetary liabilities lack the legal backing that holds bank deposits at par. See also Beyond Banks (Princeton, 2024). The “F” verdict on the US payments regime is from his Macro Musings interview (Mercatus, 9 February 2026).

• Gary Gorton and Jeffery Zhang, Taming Wildcat Stablecoins (University of Chicago Law Review, 2023): the free-banking analogy and uniform-money argument.

Statute and rulemakings

• GENIUS Act, Public Law 119-27, signed 18 July 2025: yield prohibition §4(a)(11); deposit exclusion §2(22)(B) (”including a deposit recorded using distributed ledger technology”).

• FinCEN and the banking agencies, Permitted Payment Stablecoin Issuer Customer Identification Program (91 FR 37234): primary-market scoping and the smart-contract / secondary-transfer treatment; comments due 21 August 2026.

• FinCEN, Permitted Payment Stablecoin Issuer AML/CFT Program and Sanctions Compliance Program Requirements.

• FDIC, GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions (10 April 2026): tokenized-deposit treatment and the request for comment on pass-through coverage.

• Congressional Research Service, The Stablecoin Yield Debate (IF13174).

Figures

• ABA deposit-flight warning (up to $6.6 trillion): ABA and joint-trades letters to Senate Banking, 2026.

• BlackRock BUIDL (~$2.4B) and the tokenized-Treasury sector (~$11B): CoinDesk and tokenization market trackers, 2026.

It is not the only network forming. The Cari Network is six regional banks, Huntington, First Horizon, M&T, KeyBank, Old National, and SouthState, building shared tokenized deposit infrastructure on ZKsync’s Prividium. Project Keystone is six banks on FIS’s Lyriq platform, with Citizens and Fifth Third alongside a familiar looking roster, and a plan to spin out into a bank owned entity its own people compare to SWIFT. Hazel Network is Vantage Bank and Custodia, building a community bank token that is an insured deposit inside the network and converts to a GENIUS compliant stablecoin when it leaves. Above all of them sit the rails the largest banks built first, JPMorgan’s Kinexys, which has moved more than $3 trillion in cumulative notional since 2020 and runs over $5 billion a day, with its JPMD deposit token live on Base and migrating to Canton, and Citi Token Services, live in dollars and euros across five money center jurisdictions.

It is tempting to read all of this as the banks finally answering the stablecoins, and there is real substance under it. The money center rails are in production and moving institutional volume, Kinexys has years of live settlement behind it, and the regulatory ground firmed up when the GENIUS Act became law in July 2025. But be precise about how early most of the rest is. Cari is pre-launch, its pilot only slated for later in 2026. Keystone went live this spring with a handful of banks doing simple transfers and net settlement, nothing programmable yet. The issuance side is real, but outside a few large banks it is closer to a starting line than a finished system.

All of them share the same blind spot. Each of these networks I’m sure settles beautifully inside its own walls. A Cari bank pays a Cari bank. A Keystone bank pays a Keystone bank. None of them answers the question that decides whether this becomes infrastructure or stays a row of expensive silos, what happens when a tokenized deposit at a Keystone bank has to settle against a tokenized deposit at a Cari bank, and the two sit on different ledgers under different rulebooks? Everyone is building a bridge. Nobody is building the bridge between the bridges. That gap really is the whole game, and the way it closes is probably not the way most people assume.

No one wins the war they are all fighting

The standard reassurance is that the fragmentation is temporary, that it tidies up once a winner emerges and everyone settles on it. I think that might have it backwards. Every one of these networks is fighting the same war, to become the single rail the others have to plug into, and that war has no winner. But no winner at the network layer is not the same as no winner anywhere. Someone is going to win this, and win it enormously. They are just going to win a different layer than the one everyone is fighting over, and you cannot see which layer until you see why the network war cannot be won.

Start with why every bank builds its own rail in the first place. A bank’s deposits are its cheapest funding and the base of its franchise, so the instinct when a new payment technology arrives is to build something that keeps those deposits moving inside the bank’s own perimeter. The more a bank spends on its own rail, the more it needs that rail used, and the less interested it is in anything that makes its deposits freely interchangeable with a competitor’s. That instinct does not produce one shared network. It produces JPMorgan’s rail, Citi’s rail, and a consortium for everyone too small to fund one alone. And most banks are too small. JPMorgan spends roughly $15 billion a year on technology, and of the nearly 4,000 banks in the US, the overwhelming majority have an entire expense base smaller than that single line item. The regionals did not pool into Cari and Keystone because they wanted to share. They pooled because they cannot out build the money center banks alone. That really is the barbell hardening, not a market converging.

A shared network only has value once enough banks are on it, which means every participant is waiting to see whether anyone else commits before committing themselves. Look at what the sophisticated players actually do. KeyBank, M&T, and Huntington are founding participants in Cari. KeyBank, M&T, and Huntington are also in Project Keystone. The same three regionals joined two competing networks, on two different technology stacks, at the same time. The easy reading is that they cannot make up their minds. The right reading is that they have made it up precisely. In a market where no network has tipped, you keep a foot in each camp so you are never stranded on the loser. Count the integrations, not the memberships. When the smartest participants refuse to be exclusive, they are not being indecisive, they are telling you the market will not tip to a single winner.

That is not a problem to be fixed. Consolidation onto one network was never the answer, and it was never even desirable, because a single bank owned network everyone had to settle through would be a tollbooth no one could route around. The interesting outcome was always going to be fragmentation at the network level, held together by something above it. Payments has been here before and built that something more than once, and not the way the famous example suggests.

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What payments history actually shows

Reach for a precedent and nearly everyone reaches for the same one, so let’s be exact about what happened with it. Bank of America launched BankAmericard in Fresno in 1958 as a single bank’s product. It licensed the program to other banks from 1966, and in 1970 handed it to National BankAmericard Inc., a not for profit association the member banks owned jointly, which renamed itself Visa in 1976. For its first three decades Visa was not a company in the sense people now use the word. It was a cooperative of competing banks, member owned, non stock, governed by the simple rule of cooperate on the rail, compete on the products. Visa was never a bank. It was the thing the banks built so they would not have to trust each other one by one.

Then the part I think everyone forgets too easily. In 2008 Visa went public, two years after Mastercard did, in what was then the largest IPO in US history. The cooperative the banks had built became an independent, for profit company that no longer answered to them. The banks kept issuing the cards and earning the interchange, but the network in the middle, the mark that makes any bank’s card clear at any merchant, was now its own master, worth more than almost any single bank it serves. That is what “Visa won” actually means. The banks won the issuing business, which fragmented across thousands of them. The shared acceptance layer they jointly created won everything else, and then floated away from them. This is worth holding onto, because the banks are building shared acceptance layers again, and Keystone is already planning to spin its network out into a separate entity its own people compare to SWIFT.

The bit that should make anyone cautious about the Visa analogy, though, is in US payments, Visa is the exception, not the rule. Most of the time fragmentation does not resolve into a winner at all. The ACH network moves tens of trillions of dollars a year and has no Visa. NACHA writes the rulebook and operates nothing. The switching runs through two competing operators, the Federal Reserve’s FedACH and The Clearing House’s EPN, and when a payment crosses between them one operator simply hands it to the other. Final settlement happens in central bank money at the Fed. There is no network mark, no interchange, no profit stream, and no winner, because ACH was built to cut cost rather than enable profit, and a system built to cut cost stays a thin utility. Glenbrook, whose book is the standard text on this, calls that the difference between thick networks and thin ones, and the key point is that both kinds were bank owned. Cards went thick because interchange handed them a tax to fund a brand. The ACH stayed thin because it had no such tax. The economics decided which became a Visa and which became plumbing, not the technology.

The same split runs through the rest of the system. Large value payments run on two rails that coexist rather than consolidate, the Fed’s Fedwire and the bank owned CHIPS, and both settle finally in reserves at the Fed. Foreign exchange settlement, the closest structural cousin to the problem in front of us, runs through CLS, a neutral utility the banks own jointly that settles both legs of a trade at the same instant so neither side is left holding a claim that fails. It exists because in 1974 a German bank named Herstatt was closed mid trade and took a chain of counterparties down with it, and the industry decided the cure was a shared settlement utility nobody competed with. Two token networks settling against each other is the Herstatt problem in brand new clothes, and CLS is what the answer has looked like for fifty years, ie not a winner, a utility, settling in central bank money.

And when none of that gets built, fragmentation simply persists. The US has two instant payment rails, The Clearing House’s RTP, launched in 2017, and the Fed’s FedNow, launched in 2023, and they do not interoperate at all. A bank connects to one, the other, both, or neither. The community banks largely would not join RTP, because the largest banks own it, and waited for the Fed to build a neutral one. Nine years on there is still no bridge between the two, because nothing forces one. That is not a transitional state, it is the equilibrium when no neutral layer is built and no rule compels interoperability, and it is exactly where tokenized deposits sit today. You cannot send a JPMorgan dollar into a Citibank account. The rails exist. The bridge does not.

The prize is a layer, and it can be built two ways

So there is a valuable layer here, the acceptance layer that makes a dollar a dollar regardless of which network issued it, and I think history says it gets built in one of two shapes. Thick, like Visa, a for profit network funded by a fee on every transaction, which over time becomes the most valuable seat in the system and stops answering to the banks that built it. Or thin, like the ACH and CLS, a neutral utility funded to cut cost, settling in central bank money, that nobody wins because there is nothing to win except lower unit costs. Which shape it takes turns on the same thing it turned on for cards, whether there is a profit stream the layer can tax.

A proprietary deposit token is a real asset for the bank that issues it. JPMD lets JPMorgan’s clients do things they could not do before, and because it is a deposit and not a stablecoin it can legally pay interest, which the biggest banks will use to defend their corporate balances. But a single bank’s token is not durable at the level of the system. The moment a neutral acceptance layer exists, the token can be routed around, the way an issuing bank’s brand disappeared behind the Visa mark. And it cannot deliver singleness of money on its own, because singleness, the plain fact that a dollar is a dollar regardless of which bank stands behind it, is a property of the layer above the issuers, not of any one issuer.

That layer is the thing worth owning, and the asset that controls it is not a technology, it is the rulebook. It feels like interoperability will be decided less by a technical protocol than by which legal rulebook collects enough signatures to make bank issued tokens fungible at scale. That is the cornered resource, the asset everyone needs and only one body holds, and it is what separates a strategy here from a wish. I I’m just think “picking the winning token” or “joining the right consortium” is a bit of a wish. Owning a piece of the layer that clears between tokens, the registry of who may issue, the rail that turns any inbound bank token into par-value cash, the settlement asset the cross network leg lands in, is a strategy. Tony McLaughlin, who built Citi’s institutional token business, left to build exactly the clearing piece at Ubyx, and Barclays put money into it in January 2026. His bet is that clearing can carry a fee, a few basis points against the card networks’ two to three percent, which I think is a bet this layer can be built thick. The Fed and utility path is the bet that it stays thin. Both are live, and which one wins is really the game in town.

Who gets to build it

If the thin, neutral version is the one that wins the whole market, then ownership decides everything, and the instant payments story already told us how this goes. RTP is good infrastructure, and the community banks would not join it, because the largest banks own it. They waited for a Fed operated rail and went there instead. A network owned by the money center banks does not win the long tail, no matter how good it is, because ownership is a signal everyone who is not an owner reads correctly. Now look again at the big bank tokenized deposit network forming inside The Clearing House, same operator, same ownership, probably the same signal. It may well become the settlement layer for the banks that own it, which is a large slice of the system. It may be challenging to become the acceptance layer for all 4,000 for the reason RTP did not.

I do wonder where the Federal Reserve is on all this. Governor Waller has been explicit that the Fed has dropped the language of a wholesale CBDC, because bank reserves are already a digital wholesale settlement asset and the work is to tokenize the instrument that exists rather than mint a new one. That is the missing floor. The cleanest way for a Cari token and a Keystone token to settle against each other with finality is for both legs to land in a common tokenized reserve, which is the Fedwire role and the CLS principle rebuilt for tokens. Project Agorá, the BIS project that includes the New York Fed and more than forty private banks, demonstrated precisely that and moved to real value testing in late May 2026, settling tokenized central bank reserves against tokenized commercial bank deposits across seven jurisdictions, atomically.

Stand back and the endgame stops looking mysterious and starts to look like every other payment system that grew up. Carlota Perez calls this moment the turning point, when a technology stops throwing off incompatible experiments and starts getting wired into the dull connective tissue that lets it run at scale. The six networks and the multi homing are the experiments. The turning point is the unglamorous work that ends them, a tokenized reserve as the neutral settlement asset, a thin rail that clears between issuers, and a rulebook with enough signatures to bind. Project Agorá moved to real value testing in late May 2026, settling tokenized central bank reserves against tokenized commercial bank deposits across seven jurisdictions, atomically. That is the floor being poured, the way it was poured for checks, for the ACH, for wires, and for foreign exchange. Every time but cards.

The proprietary rails survive that world, the way thousands of banks kept issuing cards long after the association they built floated away from them. Kinexys keeps running its $5 billion a day. JPMD keeps paying the interest a stablecoin legally cannot. What changes is that these tokens interconnect through a neutral layer instead of straining to be it. Issuance fragments, acceptance consolidates, and the only live question is the one that decided cards fifty years ago, whether the layer doing the consolidating is a thin utility the banks share or a thick toll they build and then hand to someone else. The thick version can carry a fee, a few basis points against the card networks' two to three percent, which is reason enough for someone to try to build it. The thin version, funded to cut cost and settling in central bank money, is the one nobody wins because there is nothing to win but lower unit costs.

Because the banks figuring out which network to join are fighting over the issuing side of a question that gets settled on the acceptance side. They are one layer too low. The layer above them, the one that turns any bank's inbound token into par value cash, is the one with the moat, and nobody owns it yet. That is the bridge between the bridges. Right now it is sitting there unbuilt.

References

The US tokenized deposit networks

• WSJ: JPMorgan, Citi and big banks plan a tokenized-deposit network at The Clearing House (June 5, 2026)

• CoinDesk: JPMorgan, Bank of America and Citi go on the blockchain offensive with a shared tokenized network (June 5, 2026)

• Ledger Insights: US banks tap The Clearing House for a tokenized-deposit network (June 5, 2026)

• CoinDesk: US regional banks build a tokenized-deposit network on ZKsync (March 17, 2026)

• FinTech Magazine: Handing control to banks, FIS and Project Keystone (May 5, 2026)

• Decrypt: Custodia and Vantage take their tokenized-deposit network (Hazel) live (Oct 24, 2025)

GSIB rails

• J.P. Morgan: JPMD USD deposit token for institutional clients

• Citi: Citi Token Services integrated with 24/7 USD clearing (Sept 27, 2025)

Payments system precedents

• Benson and Loftesness, Payments Systems in the U.S., Glenbrook Press, 2nd edition (2014). The open loop / closed loop and thick vs thin framework.

• NACHA: the ACH network, rules, and the FedACH / EPN dual operator model

• Federal Reserve: Fedwire Funds Service and the National Settlement Service

• The Clearing House: CHIPS and RTP

• CLS Group: payment-versus-payment settlement for FX

The settlement fabric and the neutral layer

• BIS: Project Agorá advances to real-value testing (May 27, 2026)

• Federal Reserve: Governor Waller, statement on tokenization and reserves (Jan 30, 2026)

• Ledger Insights: Barclays invests in stablecoin clearing network Ubyx (Jan 2026)

Regulation

• White House: fact sheet on the GENIUS Act signed into law (July 18, 2025)

• OCC Bulletin 2026-3: GENIUS Act notice of proposed rulemaking

They are all building issuance. The token, the wallet, the mint, the redemption back to a dollar. That half is crowded now, well capitalized, and moving fast.

The other half is the part that makes a tokenized dollar usable once it exists. A token moves inside its own network in seconds. Getting value from one network to another, from a regional bank’s deposit token to a money center bank’s, from a stablecoin to a tokenized deposit, requires liquidity to be sitting inside each network at the moment the payment fires. That liquidity layer, the settlement plumbing between the rails, is the part almost nobody is building. And it is the part that decides whether tokenized money stays one fungible thing, or fractures into dozens of separate balances that cannot reach each other.

What a century of plumbing was built to avoid

Step back from the tokens and look at what the existing system actually does, because the existing system solved this problem a long time ago, and solved it well.

A US bank holds one balance at the Federal Reserve. That single master account balance works across every system the bank touches, so think about wires through Fedwire, batch payments through ACH, and instant payments through FedNow. The bank does not pre-position a separate pot of money inside each network. It funds one balance, and that balance is fungible across all of them. That is the entire point of a master account, and it is the thing that keeps a dollar a dollar no matter which rail it travels on.

On top of that, the system economizes. ACH settles on a deferred net basis, which collapses thousands of gross obligations into a single end of day figure and cuts how much money actually has to move. CHIPS, the large value network that clears most of the country’s dollar wire traffic, runs a liquidity algorithm that in 2024 settled $29 of value for every $1 of intraday funding, up from $26 the year before. By another measure it settles close to $62 for every dollar of excess funding in the system. The Clearing House put the annual savings from that netting at more than $5 billion. Instant payments pull the same trick a different way. RTP runs off a joint prefunded account at the Federal Reserve Bank of New York, owned collectively by its participants, with each bank’s running position backed dollar for dollar out of the shared pool.

Notice the pattern. Every one of those mechanisms exists to do one of two things, keep liquidity fungible across many systems, or economize the total amount of liquidity the system has to hold. One master account instead of many. Netting instead of gross. A shared pool instead of a funded balance in every silo.

We also know exactly what it looks like when that infrastructure is missing, because we live with one version of it every day. It is called correspondent banking. To make a cross border payment, a bank pre-funds a nostro account in the destination currency, sitting idle at a foreign correspondent, earning little, available for nothing else. The BIS estimates more than $27 trillion sits trapped in these accounts globally. A single large global bank can have $10 billion to $25 billion tied up across its correspondent relationships. That is the cost of a system with no shared settlement asset, where to transact inside a network you must first hold value inside it. Every dollar parked in a nostro is a dollar that cannot be lent or deployed. Liquidity that cannot move is not really liquidity at all.

Atomic and gross is the opposite of netted

So this is the bit that I think the issuance story skips. Tokenized settlement does not merely fail to net. It almost makes netting impossible by design.

Tokenized settlement is atomic and gross. Atomic means all or nothing, both legs of a transaction happen together or neither does. Gross means per transaction, settled in full, with no batching and no net position at the end of the day. Both properties are genuinely valuable. Atomic delivery versus payment removes the risk that you pay and the other side fails to deliver, which is real, and it is most of why institutions want this at all.

But run it at scale and the liquidity arithmetic inverts. A netted system lets a bank send $100, receive $95, and move only $5. An atomic gross system makes it move the full $100, at the instant the payment fires, or the payment fails. There is no settlement window. There is no intraday overdraft, no daylight credit, no soft landing while an outbound payment waits for an inbound one to fund it. If the money is not there at the moment of execution, the transaction does not settle late. It does not settle at all.

The official sector has been clear eyed about this even while the industry has stayed quiet. The Financial Stability Board, the IMF, and the BIS have all made the same point, that tokenized mechanisms settling on a gross basis require far higher prefunding than the netted systems they replace, and at scale that raises liquidity demand rather than lowering it. The IMF’s 2026 work on tokenized finance said it plainly, instant atomic settlement means transactions can only occur if cash and assets are immediately available, which eliminates the possibility of netting obligations. And where liquidity pools and settlement assets differ across platforms, fragmentation impairs par convertibility and degrades netting efficiency across the whole system.

So the structural picture is this. Liquidity demand goes up, precisely at the moment liquidity becomes most fragmented. You need more of it, in more places, with less ability to net it down. That is the exact inverse of what a master account and a netting engine were built to deliver, and it is being engineered back into the system one tokenized network at a time, mostly by people looking only at the issuance side of the ledger.

Who ends up being the clearinghouse

When there is no shared facility, each institution solves the liquidity problem alone, and the system as a whole solves it badly.

A bank that wants to transact across five networks pre-funds a balance in all five. That is five pots of idle liquidity where there used to be one master account, the nostro problem brought home and multiplied. For the largest banks, this is an irritation rather than a constraint. They have the balance sheet to hold inventory everywhere, and increasingly they do. JPMorgan’s deposit token is already live on Base, deployed on the Canton Network, and settling cross border tokenized Treasury redemptions on the XRP Ledger. A handful of institutions can afford to be everywhere at once.

For everyone else, the math is brutal, and I think it concentrates. Cross network settlement gravitates toward whoever already holds inventory in every network, which means the few largest institutions quietly become the de facto clearinghouses for everyone else, on terms they set themselves. A smaller bank either pays one of those institutions for access, or falls back on slow off chain correspondent workarounds, which reintroduces the precise friction tokenization was supposed to remove. The community banks that chose FedNow over the bank owned instant rails already understand how this story ends. They have lived the question of who owns the pipe and what they get charged to use it.

This is the barbell effect, expressed in liquidity rather than assets. The institutions that can fund everywhere consolidate the clearing function. The ones that cannot are left renting access or having to route around it. The middle hollows out, not because anyone designed it that way, but because that is where the absence of shared infrastructure naturally pushes the system.

The attempts, and what they leave unsolved

I’m clearly not the only one thinking about this, but most of what is being built around this problem feels like its solving something adjacent to it.

The most serious US attempt was the Regulated Settlement Network proof of concept, which in late 2024 brought together Citi, JPMorgan, Mastercard, Swift, TD Bank, US Bank, Wells Fargo, Visa, Zions, and others to test round the clock multi asset settlement of tokenized central bank money, commercial bank money, and Treasuries on a single shared ledger, with each institution running its own partition. The findings were encouraging and the legal workstream found no fundamental blockers. It was also a proof of concept, and it has not yet become production infrastructure.

Partior, the JPMorgan, DBS, and Temasek venture now backed by Standard Chartered and Deutsche Bank, runs live atomic cross border settlement today. But it is a closed, member owned network, which is to say it is one more rail that needs its own liquidity positioned inside it, not a layer that makes liquidity fungible across rails. Fnality, which grew out of the old Utility Settlement Coin idea, raised $136 million last year from Bank of America, Citi, and others to push into dollars and euros, and it took roughly a decade to get from concept to live payments, gated the entire way on Bank of England settlement finality. Ubyx, founded by Tony McLaughlin, the former Citi payments architect who designed the Regulated Liability Network, raised $10 million from Galaxy, Coinbase, and Paxos, took a first stablecoin investment from Barclays, and is building a real clearing system. But Ubyx clears redemption at par across issuers. It solves acceptance, getting a stablecoin back to a dollar in a bank account, which is necessary and valuable, and it is a different problem from funding the intraday gap when an outflow fires before an inflow lands.

Add them up and you get a great deal of motion around the settlement question and almost nothing aimed directly at the liquidity layer itself, a shared, jointly funded pool that any participant can draw on to cover a cross network shortfall, governed by a common rulebook for who can draw, against what collateral, and how a loss gets shared. That facility is exactly what CHIPS and the RTP joint account already are for the legacy rails. For tokenized networks, it does not yet exist.

Who provides it, and on whose terms

A shared facility is not free of risk, and pretending otherwise is how you build the next crisis. Mutualizing liquidity also mutualizes exposure. Pool reserves without a rulebook and you have built a channel for moral hazard and a single point of failure in the same structure. The hard questions are all governance questions, who gets to be a member, how votes are weighted, whether a community bank’s voice survives in a structure the largest members fund, and who actually operates the thing versus who merely convenes it and writes the standards.

We have run this experiment before, and the result is instructive. RTP and Zelle were built and owned by the large banks. Community banks largely declined to join, and waited instead for the Fed to build the neutral alternative, which became FedNow. When the institutions that need shared infrastructure do not trust the institutions that own it, they do not adopt it. They route around it, or they wait for a neutral party, and the fragmentation persists in the meantime. Any tokenized liquidity facility that gets the ownership question wrong will run into the same wall.

There is one development that could make much of this net down on its own, tokenized central bank reserves. If the top tier of the monetary system arrives on programmable rails with a round the clock intraday credit equivalent, a large part of the cross network funding need collapses back into the master account it came from, and a private pool matters far less. I think that is probably years away, and I would not build a strategy around it landing soon. Until it does, the function does not disappear simply because nobody has built the facility. It gets performed informally, expensively, by whoever already holds the inventory.

That is the real state of play. The issuance layer is the part everyone can see, so it is the part everyone is building, and it is turning into a land grab. The liquidity layer is the part that decides who clears whom, and right now it is empty. Empty infrastructure does not stay empty. It gets filled by whoever was already standing in the room, on whatever terms they care to set. The wallets are the announcement. The liquidity between the networks is the business.

Share Atomic Settlement

References

Tokenized issuance and platform volumes

• J.P. Morgan — Kinexys 2026 milestones (fund flow, JPMD on Base, $3T cumulative)

• CoinDesk — Ripple and JPMorgan settle first cross-border tokenized Treasury redemption on XRP Ledger (May 2026)

• Yahoo Finance — JPMorgan deploys JPM Coin on the Canton Network

• CoinDesk — US regional banks build tokenized deposit network (Cari) on ZKsync

• KuCoin — stablecoin liquidity passes $320.6B, May 2026

• DefiLlama — live stablecoin market cap and supply

Legacy settlement liquidity and netting

• The Clearing House — CHIPS liquidity algorithm (29:1 in 2024, up from 26:1)

• PYMNTS — CHIPS liquidity algorithm frees billions from bank balance sheets

• Federal Reserve — order concerning interest on RTP joint balances (NY Fed prefunded account)

• The Clearing House — RTP network for participating institutions

Trapped liquidity and correspondent banking

• Circle — how liquidity fragmentation holds back global payments ($27T trapped)

• The GCC Edge — the $27 trillion liquidity problem in global trade

Atomic gross settlement and liquidity demand

• Financial Stability Board — The Financial Stability Implications of Tokenisation (Oct 2024)

• IMF — Tokenized Finance, IMF Notes No. 26/01 (April 2026)

• OECD — Tokenisation of Assets and DLT in Financial Markets (2025)

Settlement-layer attempts

• SIFMA — US financial sector demonstrates feasibility of multi-asset, cross-network settlement (RSN PoC findings, Dec 2024)

• Partior — live blockchain network for 24/7 atomic settlement

• Deutsche Bank — first euro-denominated cross-border payment on Partior (Sept 2025)

• Live Bitcoin News — Fnality secures $136M to expand tokenized settlement network

• CoinDesk — stablecoin clearing startup Ubyx raises $10M (Galaxy, Coinbase, Paxos)

• Ledger Insights — Barclays invests in stablecoin clearing network Ubyx

I think the same migration is now happening in payments, and most bank strategy conversations that I hear are still framed one layer too low. The rails, FedNow, RTP, ACH, wires, card networks, and now onchain networks, are starting to interoperate and commoditize. The instruments, tokenized deposits and stablecoins, are settling into a two tier structure that banks have already decided they need to support. The value that is compounding, and will compound fast, sits above the rails and the instruments. SWIFT, in announcing the move of its blockchain shared ledger to MVP this year, called it a “shared digital orchestration layer.” JPMorgan describes Kinexys as a control plane for money movement. The terminology is more than marketing I think. It is more a structural claim about where value capture is moving.

I do think that claim is right, with two qualifications. The terminology itself probably deserves more scrutiny than it usually gets. And the cloud computing analogy, which I hear many people using, breaks in a specific place that matters, the place where balance sheet, clearing, and settlement finality live. I think both qualifications change what a bank should actually do about it.

What “control plane” actually means

The phrase is actually borrowed from networking, and the original meaning is pretty precise. In a router, the control plane decides how packets get forwarded, the routing table, the protocols that maintain it, the policies that govern access. The data plane does the actual forwarding. The two are deliberately separated. AWS adopted the same distinction. The control plane is the API surface that lets you create, configure, and manage resources. The data plane is the resource itself doing its job. So even when the control plane fails, the data plane keeps running.

That distinction maps reasonably well onto payments. The rail, RTGS, ACH, FedNow, RTP, a tokenized deposit ledger, a stablecoin network, is the data plane. It moves the value. The orchestration layer is the control plane. It decides which rail, which liquidity pool, which FX path, which compliance wrapper. SWIFT’s own description of its forthcoming ledger reads like a textbook control plane definition: it records and validates interbank payment commitments, provides a synchronized view of obligations, sits above existing rails rather than replacing them.

The terminology fits, but with one caveat the cloud world doesn’t have. In networking, the data plane carries packets, which are pure information. Lose a packet, retry it. The forwarding decision is reversible at almost zero cost. In payments, the data plane carries money. Once a payment is final, it is final. The decision the control plane makes is not routing in the cloud sense, it is a financial commitment, often involving credit, FX risk, and settlement obligation. The control plane in payments doesn’t just route, it implicitly underwrites every routing decision it makes, or it relies on whoever owns the underlying balance sheet to underwrite it. That is what makes this layer harder to commoditize than its cloud equivalent, and what most of the orchestration narrative glosses over.

What the orchestration layer actually does

Strip the abstraction back, and I think the orchestration layer makes four decisions on every cross border or complex domestic transaction. Which rail. Which pool of liquidity. Which FX path. Which compliance wrapper. Each decision has to be made in real time, against the client’s stated outcome, and each has financial and regulatory consequences that don’t unwind cleanly.

Let’s take a corporate treasurer initiating a $50 million payment from a Singapore subsidiary to a German counterparty, due same day. The orchestration layer evaluates correspondent banking through SWIFT, the option of using SWIFT’s forthcoming blockchain ledger or Partior for 24/7 atomic settlement, the option of moving via the bank’s own tokenized deposit rail, the option of converting to a stablecoin and settling on a public chain, and the FX path for each. It applies sanctions, BSA, and credit checks against every leg. It picks the routing that meets the deadline at the lowest total cost including FX spread, fees, and any liquidity funding cost. It executes. It reports the outcome on a single screen, with the ability to override.

This is really not a user interface, nor is it a dashboard. It is a decisioning engine with embedded liquidity access, embedded FX execution, embedded compliance, and the authority to commit balance sheet on the client’s behalf. The screen is downstream of the decisioning. Cross border fintechs figured this out a decade ago, which is why Airwallex is now processing $266 billion in annualized transaction volume at a $1.2 billion ARR, and why Wise moved £181.7 billion across borders in its FY26 with 75% of transactions now settling instantly. Wise Platform, the white labeled version of its infrastructure, is now around 5% of the company’s cross border volume, which is to say banks are paying Wise to do their orchestration for them. Neither owns the rails. Both own the decisioning. Both are growing faster than the underlying market.

Banks have largely treated the customer screen as the product and left the decisioning fragmented across rail teams. That is not an aesthetic problem. To me, its really the reason the economics are leaking.

The work is harder than the headlines suggest

The work the control plane has to do is getting harder at exactly the same time the rails are getting cheaper. The rails are multiplying. A payment in 2026 might move across SWIFT, FedNow, the issuing bank’s tokenized deposit rail, Broadridge’s distributed ledger repo platform, Partior, Kinexys, a stablecoin on Base or Arc, or a hybrid path that uses several in sequence. Broadridge’s DLR alone processed $384 billion in average daily repo volume in December 2025, totaling close to $9 trillion for the month, and ran 508% year on year growth into January 2026. That is one rail, in one segment.

Now we have the instruments multiplying alongside the rails. Tokenized deposits at JPMorgan, HSBC, Citi, DBS, and various regional consortia. Stablecoins at $315 billion in circulating supply at the end of Q1 2026, with USDC at roughly $78 billion and the GENIUS Act rulemaking in train. Tokenized money market funds. Tokenized treasuries. Each instrument has its own settlement finality, its own legal framework, its own regulatory regime, its own operational hours, its own credit characteristics. The number of permutations a single payment might take is exploding, and each permutation puts a different combination of counterparty and compliance risk on the table.

The orchestration layer is what keeps that complexity legible to the client. Without one, the client makes rail and instrument choices on every transaction, which is exactly what the treasurer’s job is not. With one, the rails and instruments become fungible from the client’s point of view, and the bank’s value capture moves from operating any particular rail to operating the layer that routes across all of them.

Where the AWS analogy breaks

The cloud parallel is worth pushing on, because the economics it predicts are not subtle. In 2010, servers and storage were the expensive part of the IT stack. Enterprises bought hardware, depreciated it, and staffed teams to run it. The control layer was thin and often built in house. By 2025, the economics had inverted. Physical infrastructure became a commodity. The control plane became the product. The hyperscalers captured the value migration not because their servers are better, but because the coordination layer they operate is hard to replicate and gets stronger with each additional service they integrate.

The directional analogy holds for payments. The specifics break in three places that matter for any bank trying to position itself.

The first break is balance sheet. AWS commoditized compute because compute is fungible. A virtual CPU running a workload in Oregon is interchangeable with one running it in Ohio. Of course, money is fungible, but not quite fungible in that way. A dollar in a tokenized JPMorgan deposit account carries JPM’s credit. A dollar in USDC carries Circle’s credit and the credit of its reserve managers. A dollar in a stablecoin issued by a smaller player carries different counterparty risk again. The control plane in payments cannot route across these instruments without taking a view on the credit of each one, and the credit of each one is bound to a balance sheet the orchestration layer doesn’t own. Pure play orchestration fintechs hit this ceiling fast. Airwallex and Wise can route around correspondent banking elegantly, but they cannot route a $500 million corporate intragroup transfer the way Kinexys can, because Kinexys is implicitly backed by JPM’s balance sheet. When Mitsubishi adopted Kinexys for intragroup cash management in March 2026, the single transaction limit was $500 million. No fintech in the world can write that ticket! The control plane does not exist as a separate economic layer in that transaction. It is fused to the underwriter, and the underwriter is the bank.

The second break is the difference between routing and clearing. The orchestration layer chooses the rail. It does not, by itself, eliminate settlement risk. A control plane that picks a path and pushes a transaction through is doing routing. Clearing is what happens when obligations between counterparties are netted, validated, and finalized, and historically that has required either a balance sheet between them (correspondent banking) or a multilateral utility above them. CLS Bank settles over $8 trillion a day in FX, with peak days above $19 trillion, and reduces funding requirements by more than 96% through multilateral netting. That capital efficiency is a clearing achievement, not a routing one. It exists because CLS nets multilateral obligations across a closed set of currencies and members, with explicit settlement rules and loss-mutualization. The original lesson from Herstatt in 1974 was that settlement risk is what kills you when you assume the routing was the hard part.

Atomic settlement networks like Partior collapse routing and clearing into a single primitive, which is why their growth is real and why the founding banks invested. Atomic PvP eliminates the temporal gap that creates Herstatt risk in the first place. A routing engine sitting above multiple non atomic rails does not. It sequences transactions across systems that each have their own settlement finality, their own legal framework, and their own failure modes. The economics of orchestration are real. They are not the same as the economics of clearing. A bank that builds an elegant control plane on top of fragmented rails has built something useful, but it has not built CLS, and treating the two as equivalent is the mistake that gets noticed when something breaks.

The third break is concentration risk. The same property that makes a control plane valuable, coordination of complex systems through a single decisioning point, also makes it dangerous when it fails. The October 2025 AWS outage took down a long list of banks and fintech services that had not realized how dependent they had become on a single coordination layer. The FFIEC has been writing about cloud lock in risk since 2020 and the BIS has flagged it repeatedly. The same risk pattern transfers directly to payments orchestration. If a bank’s flow runs through a single proprietary control plane, an outage in that plane is an outage in the bank’s payments business. If an industry’s flow concentrates into a small number of orchestration providers, a failure in one becomes systemic. This is not theoretical. It is why regulators are watching the orchestration question, and why any bank thinking about ceding the layer to a third party should think hard about what operational resilience looks like in that world.

Who is trying to own the layer

The right way to read the current wave of institutional announcements is not which bank is issuing which instrument, but which institution is making a credible run at the decisioning layer above the instruments. Four categories of competitor are visible. A fifth is harder to name but is already taking flow.

The first is the incumbent network operators, with SWIFT the cleanest example. SWIFT completed the design phase of its blockchain shared ledger in March 2026 and is targeting a live MVP running tokenized deposit payments before the end of the year, with more than 40 banks participating. The architecture is explicitly orchestration. SWIFT will operate the ledger, validate funding commitments, coordinate interbank workflows, and reuse existing compliance processes. The phrase “shared digital orchestration layer” appears in the official announcement. SWIFT is making a serious bid to migrate from messaging layer of the old rails to coordination layer of the new ones, with the same network of 200-plus jurisdictions. If that succeeds, SWIFT preserves its position. If it fails, SWIFT faces the harder problem that messaging and decisioning are different businesses with different economics.

The second is the mega bank platforms. Kinexys is the most visible, processing roughly $7 billion a day with cumulative volume above $3 trillion since launch in 2020, and a public target of $10 billion daily. JPMorgan, Citi, HSBC, BNP Paribas, and a handful of others are building similar capability. The advantage is structural. The bank’s balance sheet is already underneath the platform, which means liquidity and FX are native rather than bolted on. Demand from the bank’s existing corporate base is built in. The disadvantage is that a single-institution platform has interoperability limits unless it opens up. Kinexys has started doing exactly that, with cross-chain settlement work and a corporate pipeline that now extends to Mitsubishi, Siemens, Brevan Howard, BlackRock, and LSEG. Whether mega banks can credibly run an industry-wide orchestration layer, or whether they end up running multiple competing single-institution layers, has not been settled. The answer matters for everyone else in the stack.

The third is the consortia. Partior, founded by JPMorgan, DBS, and Standard Chartered, with Deutsche Bank and Emirates NBD now investors, runs 24/7 atomic multi-currency settlement and describes itself as an “interoperable neutral network” enabling orchestration across platforms. Deutsche Bank’s head of cash management, after the bank’s first euro-denominated transaction on Partior in late 2025, framed the entire strategy in orchestration terms

Project Agorá at the BIS Innovation Hub is doing similar work for the official sector. Consortia have legitimate neutrality, which is their main advantage, and slow governance, which is their main constraint. They tend to win where no single bank has pricing power and lose where one does.

The fourth is the fintechs. Airwallex, Wise, Stripe, BVNK, and a long list of specialists are building orchestration top down, starting from client experience and acquiring rail access as they grow. The advantage is design discipline and speed. The disadvantage, as covered above, is that they hit a balance sheet ceiling at a certain transaction size and a regulatory ceiling at a certain flow type. This category is taking the most market share at the SMB and mid market levels, and is the most likely to be acquired or partnered by a bank, consortium, or payment network that wants the technology and does not have time to build it.

A fifth category, harder to name, is the stablecoin issuers. When a stablecoin becomes the settlement asset for a payment, the issuer is part of the orchestration fabric whether it markets itself that way or not. Circle’s CCTP is explicitly an orchestration network for USDC across chains. Tether’s dominance in certain emerging market corridors is a de-facto orchestration layer that bypasses banks entirely. Visa is now settling stablecoin volume at a $4.5 billion annualized run rate. The GENIUS Act rulemaking over the next few months will set the terms on which this category competes against the bank led options.

Infrastructure inversion, again

For two decades the valuable part of financial services sat at the application layer, the consumer fintech UX, the small business front door, the embedded finance integration. Most venture investment in the sector flowed there because that was where the customer facing differentiation lived. The migration has reversed. Value is now moving back down to the infrastructure layer, and I think specifically to the orchestration layer that sits just above the rails and instruments. The companies that own that layer will be the picks and shovels of the next decade of financial services, the way the hyperscalers became the picks and shovels of the software industry.

The orchestration layer in payments is not perfectly analogous to the cloud control plane, because money is not perfectly analogous to data. Balance sheet, clearing finality, and concentration risk shape who can credibly own the layer and how much of it any one institution should try to own. A bank that participates only as a rail operator, in a world where the orchestration layer is forming above it, ends up in the position of a hardware company in a software industry. The rail will be used, but the revenue will be thin and the client relationship will sit one layer up.

The right question for a bank strategy review in 2026 is really not whether to do onchain payments, or even whether to issue a tokenized deposit. It is what position the bank will hold in the orchestration layer that is forming. Operate one or more rails and cede the layer. Participate in a consortium and share it. Or build a proprietary version that can eventually open up. None of those is to sit out. The layer is being built and the question is which seat at which table.

Clients buy certainty. Rails deliver commodities. The orchestration layer is where certainty gets constructed, and the institutions that figure out how to construct it without becoming a single point of failure are the ones that will get paid.

References

• AWS Q4 2025 earnings, CNBC: $35.6B revenue, 24% YoY growth, $142B run rate, 35% margin

• Swift’s blockchain-based shared ledger progresses to MVP, SWIFT: “shared digital orchestration layer,” March 2026

• Kinexys by J.P. Morgan: $7B daily, $3T cumulative since 2020, $10B daily target

• Mitsubishi Corporation adopts Kinexys Digital Payments, JPMorgan: March 2026

• Broadridge DLR processes ~$9T in December, Broadridge: $384B average daily volume

• Broadridge DLR achieves 508% YoY growth in January, Broadridge

• Deutsche Bank conducts first euro transaction via Partior, Deutsche Bank: September 2025

• Partior: JPMorgan, DBS, Standard Chartered, Deutsche Bank, Emirates NBD

• Airwallex 2025 end-of-year mission update: $266B annualized volume, end-2025

• Airwallex revenue and valuation, Sacra: $1.2B ARR, March 2026

• Wise plc investor relations: £181.7B FY26 cross-border volume, 75% of transactions instant, Wise Platform ~5% of volume

• Total stablecoin supply, DefiLlama: $315B end Q1 2026

• Q1 2026 Stablecoin Report, Stablecoin Insider

• Visa stablecoin settlement statistics, Stablecoin Insider: $4.5B annualized run rate, January 2026

• CLSSettlement, CLS Group: ~$8T daily settlement, 96% funding reduction via multilateral netting

• The day the internet broke banking, The Financial Brand: October 2025 AWS outage analysis

Once tokenized US equities can sit at the same address as tokenized US Treasuries, tokenized money market funds, tokenized private credit, stablecoin balances, and bitcoin, the question of what an “account” is really starts to fall apart. Or I suppose more precisely, the question of where the customer relationship lives starts to fall apart.

I think there’s a bit of a vocabulary problem in tokenized finance, and it tells you almost everything about who is best positioned for what is coming. Bankers and fintech operators say “account.” They mean a balance with a name on it, a card attached, a statement, KYC, send and receive across rails, an entry in a ledger somewhere. Crypto native builders say “wallet.” They mean an address, a set of keys, control over assets onchain. Both groups think they are talking about roughly the same object dressed up in different clothes. They’re really not.

The vocabulary diverged because the worlds did. Banks issued accounts because banks held one type of asset, cash deposits. Brokers issued accounts because they held another, securities. Fund custodians issued accounts because they held another, fund interests. The architecture of retail finance was always a set of single asset institutions, each with its own account primitive, each organized around the asset class it was licensed to hold. The “account” was never an abstraction over assets. It was a ledger entry inside a specific institution that could only hold the specific thing that institution was allowed to hold.

The wallet was different from the start. Bitcoin had no banking layer. Ethereum had no banking layer. The wallet was not a slice of an institution’s ledger, it was an address that held whatever could be expressed onchain. From the inside, that looked like a primitive. From the outside, to bankers, it looked more like a toy.

It was not a toy. Actually I think about it as the bundle.

The Merrill precedent

In 1977, Merrill Lynch introduced the Cash Management Account. The CMA combined a brokerage account, a money market fund sweep, check writing, and a Visa card. The cash from your trading account did not sit idle, it swept overnight into a money fund earning market rates. You could write a check against the money fund balance. You could spend on the card and you could buy and sell securities. One statement, one provider, one consolidated view of the customer.

Banks at the time were furious. Through the late 1970s and early 1980s, they sued, lobbied, and ran campaigns to stop the CMA on the grounds that Merrill was effectively a bank operating without a banking license. They lost. By 1981, four years after launch, Merrill had 300,000 CMA customers. By the mid 80s, more than a million. The reason banks were angry was not that Merrill had built a better product. It was that Merrill had bundled four previously separate institutional relationships into one, and the bundle was a different kind of object from anything banks were licensed to build.

Money funds in the late 1970s grew because Regulation Q capped what banks could pay on deposits while inflation ran above the cap. That meant the deposits left. Merrill’s innovation was not the money fund itself, it was wrapping the money fund inside an account that also did checking, lending, and securities, so that the customer never had to leave the broker for any reason.

That is probably the optimistic reading of the precedent. I think the honest reading is really interesting.

Why the CMA stalled

The CMA succeeded as a product and failed at consolidation. The product became a category every broker copied. But the customer relationship did not actually migrate away from banks. Most CMA holders kept their checking account at a bank. The bundle captured the affluent investor’s cash and securities slice. It did not capture the customer’s financial life. Three things stalled it.

The first was that the regulatory arbitrage closed. The CMA was substantially powered by Regulation Q, which capped what banks could pay on deposits while inflation ran above the cap. The Depository Institutions Deregulation and Monetary Control Act of 1980 began the phaseout, and by 1986 the cap was gone. Once banks could pay market rates, the asset drain Merrill was exploiting largely stopped. The bundle’s pull weakened in lockstep with the spread.

The second was that Glass-Steagall capped the bundle. Merrill could not actually offer a deposit account. The “checking” inside the CMA was check writing against a money fund. The card was issued by a partner bank. The credit was margin against securities. So Merrill never held the customer’s primary bank relationship in any chartered sense. The bundle was operationally incomplete because the regulatory perimeter did not let one institution hold cash, securities, and credit at the same time.

The third was cost structure. The CMA’s operational economics required affluent balances, with a $20,000 minimum at launch. The bundle never really became a mass market financial container, because the unit economics of running brokerage operations, money fund servicing, check clearing, and card processing for a single customer did not work below a certain balance. Banks kept the mass market by default.

Then banks counter bundled. Through the 1980s and 1990s they built their own brokerage and money fund products, and by the time Glass-Steagall was repealed in 1999 the bank built bundle was close enough that the broker built bundle had lost its decisive advantage. Schwab and Fidelity competed Merrill down. The customer relationship redistributed across institutions rather than consolidating into one. The bundle settled into a category, and not a winner.

So you might conclude from the CMA precedent that the bundle is real, but it stalls when the structural arbitrage driving it closes, when the regulatory perimeter stops a single operator from holding the full asset stack, and when the cost structure forces the bundle to stay premium. Three constraints. I think it’s worth holding each one up against the wallet to see whether it binds the same way.

Why the wallet is not the CMA

The wallet does not depend on regulatory arbitrage. Its advantages, treasury optimization across asset classes, multi asset collateralization, native data on the customer’s full balance sheet, scoped delegation to autonomous agents, are structural and technology driven. They do not turn on a yield spread that can close. They do not weaken when interest rate regimes shift or when stablecoin yield rules tighten or loosen. The CMA’s pull was substantially a Reg Q artifact. The wallet’s pull is not an artifact of any single regulation.

The wallet has no Glass-Steagall problem. The wallet operator does not need to hold the assets in the chartered sense. The token is the legal share, the legal Treasury claim, the legal money fund interest, with the issuer and the transfer agent and the custodian of record sitting where the law requires them to sit. The wallet operator holds the keys, routes the flows, and serves the customer. The legal perimeter follows the asset, not the operator. There is no equivalent to the wall that prevented Merrill from holding deposits.

The wallet’s cost structure runs on shared infrastructure. The chains, the settlement, the smart contract logic that holds the assets are not paid for per customer by the wallet operator. The marginal cost of adding a customer is closer to zero than to the per account operational cost of running a brokerage. The premium only constraint that kept the CMA an affluent product does not apply here.

What does carry over from the CMA story is the counter bundling risk. Banks counter bundled Merrill, and they will try to counter bundle the wallet. The question is whether they can? To counter Merrill, banks had to build a brokerage division and a money fund. To counter the wallet, they have to stand up a multi asset, programmable, agent ready container that holds tokenized everything across jurisdictions on shared infrastructure. That feels like it’s a much bigger transformation than spinning up a brokerage. Some banks will get there. A lot will not. Which banks land where is the really the question, and I think it’s an institutional design question more than a technology one.

What the wallet absorbs

This is where the numbers start to matter. Stablecoin float crossed $320 billion in May 2026. Tokenized real world asset value hit $26.4 billion in March, up from $6.6 billion a year earlier, roughly four times the prior year. BlackRock’s BUIDL, the tokenized Treasury fund, sits at around $2.85 billion and accounts for roughly forty percent of the tokenized Treasury market, which itself has crossed $5 billion. The Computershare and Securitize agreement opens a structural pathway for the roughly $70 trillion of US listed equity to issue directly onchain. Six asset categories have each crossed the $1 billion mark: private credit, commodities, US Treasuries, corporate bonds, non-US sovereign debt, and institutional alternative funds.

None of those numbers individually look big in the context of US household financial assets, which run somewhere north of $120 trillion. The point is the trajectory of what fits inside a single address. A year ago, a wallet held stablecoins and a few experimental Treasury tokens. Today it can hold short dated Treasuries, money market interests, private credit positions, gold, corporate debt, bitcoin, and, pending the Computershare flow scaling, public equities. The asset categories that previously required separate institutional relationships are arriving into the same container, one after another.

This is what makes the wallet the bundle. Not the token standard. Not the chain. The fact that the container is asset agnostic in a way that no banking, brokerage, or custody account has ever been.

The economic gravity of the bundle

Once you hold a customer’s full balance sheet in one place, four things change in the operator’s favor, and I think they all compound.

The first is treasury optimization. If a customer’s idle dollars and their tokenized money market fund holdings live at the same address with sub second conversion between them, there is no reason for cash to sit idle. Whoever owns the wallet can offer auto routing, where cash sweeps into the highest yielding tokenized money market fund the customer’s profile permits, and routes back to spendable balance the moment a payment is initiated. This is not a premium service. It is a default feature that makes idle cash an unforced error. The yield debate currently consuming the regulatory conversation around stablecoins becomes structurally less interesting once treasury automation is one click below the surface, because the spendable balance does not have to pay yield if the wallet’s other holdings do.

The second is collateralized lending. When a customer’s cash, Treasuries, equities, private credit, and bitcoin all live in one address, lending against the consolidated balance sheet becomes one underwriting decision instead of five. Margin calls become a programmatic operation against the wallet rather than a phone call to a different institution. The credit product the wallet operator can offer is structurally better than what any single asset incumbent can offer, because the single asset incumbent only ever sees a single asset.

The third is data. Whoever holds the wallet sees the customer’s full financial life: what they hold, what they earn, what they spend, what they save, what they trade. That is the dataset banks have been trying to assemble for forty years through aggregation, account to account data sharing, and open banking mandates. The wallet operator gets it natively, not because of a regulatory regime, but because the data is structurally co-located with the assets.

The fourth is that agents need wallets, not accounts. An autonomous agent that can pay an invoice, rebalance treasury, settle a trade, and move funds across rails needs scoped access to a portfolio, not a checking balance. The wallet is the natural surface for delegation because it is the surface that has the assets. The “account” is a thin slice of one asset class. Useful for cards and rails. Useless as the primary delegation surface for anything more sophisticated.

Where the platforms are pointed wrong

Most of the platform level conversation right now is still pointed at the account. Marketplaces want to issue their users a dollar account. Creator platforms want to issue their creators a dollar account with a card. Remittance companies want to give their recipients a dollar account they can spend from. Each of these is a real improvement over the status quo, where the platform pays out to an edge bank in another country and loses the customer relationship the moment the cash lands. None of them are the actual prize.

The actual prize is issuing the user a wallet. The dollar balance is one of the assets that wallet holds. The platform that issues a wallet is, eventually, holding the user’s tokenized treasuries, their tokenized money fund position, their bitcoin savings pocket, their tokenized share of the platform’s own equity if the platform is public, and the spendable dollar balance that pays for things in the meantime. The platform that issues a dollar account is holding only the spendable balance, which is the fraction of the customer’s financial life with the lowest yield, the lowest stickiness, and the most competition.

I think this is the move most platforms are not going to make in time. Issuing a wallet is a bigger commitment than issuing an account. It implies standing up custody operations, asset class specific compliance, surveillance, governance over the smart contracts that hold the assets, and a customer support function that can answer questions about more than dollars. It implies hiring people who understand securities operations, not just payments. It implies being a balance sheet relationship, not a payments endpoint.

The platforms that get there first will look like Merrill Lynch in 1981. The platforms that do not will look like the regional banks that watched 300,000 customers walk out the door and decided the problem was probably regulatory.

Different kind of institution

A bank competing to be the wallet operator is not competing to be a bigger bank. It is competing to be a different kind of institution. The economics per asset class are smaller than holding the assets directly, but the relationship spans every asset class, which is the trade incumbents have not had on offer before. Most of them are not currently set up to take it. Their internal systems, their compliance organizations, and their product teams are organized around single-asset operations. The wallet is multi asset by definition. The pivot is closer to what cloud migration was for IT departments than to anything in the recent banking playbook, except with charters and capital requirements wrapped around it.

The vocabulary tells you who is serious

When a banker walks into a tokenization conversation and starts asking which “account” the customer holds, what they are revealing is not a translation issue. They are still operating inside a frame where one institution holds one asset class on behalf of the customer. When a crypto native builder treats the wallet as a primitive that the customer manages alone, what they are revealing is that they have not yet thought about who serves the customer when the wallet contains a tokenized share of Apple, a tranche of private credit, and a money market position. Both vocabularies are partial, and the institutions that figure this out first are the ones already trying to bridge the two.

The signs are visible across several institutions building wallet infrastructure with the operational discipline of a custodian and the compliance perimeter of a broker, absorbing each new asset class as it tokenizes. Computershare and Securitize, opening the path for tokenized US equities. BlackRock’s BUIDL extending across multiple chains. State Street’s tokenized fund servicing. Coinbase Prime’s institutional flows. The remittance and creator platforms experimenting with branded dollar accounts are an early, incomplete version of the same instinct.

None of these institutions are calling what they are building “the wallet.” Most are still calling it an account, or a custody product, or a tokenization platform. The naming is lagging the architecture, which is normal. Merrill did not call the CMA “the bundle” either. It called it a cash management account, and it took the banks half a decade to figure out what they were actually losing.

The account is not going away. It is being absorbed. The product the customer sees may still have a name like “global account” or “checking account” or “treasury account.” Underneath it will be a wallet that holds the spendable balance and everything else. The institution that operates that wallet holds the customer relationship. The name on the front door is a marketing question. The name on the keys is a structural one.

The wallet is the new bundle. The institutions that understand that are building the infrastructure for it. The institutions that do not are competing for the spendable slice of a balance sheet they no longer get to see.

References

• Securitize and Computershare announce agreement to enable tokenized shares for U.S. issuers (April 29, 2026)

• Securitize, Computershare open path for $70 trillion in U.S. stocks to move onchain (CoinDesk)

• Tokenized Real-World Asset Value Jumps Fourfold to $26 Billion (PYMNTS, 2026)

• BlackRock BUIDL Tokenized Treasury Fund Hits $2B AUM (Blocklr, 2026)

• BlackRock USD Institutional Digital Liquidity Fund (Securitize)

• Stablecoin Liquidity Hits $320.6B Milestone in May 2026 (KuCoin)

• 75 Years of Innovation: Cash Management Account (SRI International)

• When Merrill Lynch Broke Banking (FinTech Prof Substack)

• Dividends: Battle over the CMA Clones (TIME magazine archive)

• US Federal Reserve Z.1 Financial Accounts of the United States

Mastercard gets NY BitLicense, signaling shift to direct stablecoin settlement

Mastercard Transaction Services has obtained a New York BitLicense from NYDFS, enabling the payments giant to transmit and settle directly in stablecoins without relying on third-party licensed intermediaries — a structural shift that positions Mastercard to compete as a direct digital currency settlement rail rather than merely a network overlay. For banks and payment institutions, this signals that major card networks are building native stablecoin settlement capability, not just partnerships.

https://www.ledgerinsights.com/mastercard-gets-ny-bitlicense-signaling-shift-to-direct-stablecoin-settlement

SoFi launches native stablecoin to all its banking customers

SoFi has launched SoFiUSD, the first stablecoin issued by a U.S. national bank, to all 14.7 million of its banking customers on Ethereum and Solana, with plans to follow with tokenized deposits. This is a landmark moment: a federally chartered bank is now distributing a bank-issued stablecoin at consumer scale, testing the boundary between traditional deposit-taking and programmable digital money.

https://www.americanbanker.com/news/sofi-launches-native-stablecoin-to-all-its-banking-customers

Paxos Securities Settlement Company Receives Clearing Agency Registration from the U.S. Securities and Exchange Commission

Paxos has received formal SEC registration as a clearing agency for its blockchain-based securities settlement business, marking the first time a blockchain settlement firm has obtained this designation from U.S. regulators. This clears the path for on-chain equities settlement to operate within the regulated U.S. market structure, with significant implications for post-trade infrastructure.

https://www.paxos.com/newsroom/sec-registers-paxos-securities-settlement-company-as-a-clearing-agency

DTC tokenization service to add Stellar as second public blockchain

The Depository Trust Company (DTC) has announced it will connect its tokenization service to Stellar as a second public blockchain by H1 2027, expanding beyond its existing chain and signaling that the world’s largest securities depository is building a multi-chain strategy for tokenized asset settlement. This is a major infrastructure commitment from the heart of U.S. market plumbing.

https://www.ledgerinsights.com/dtc-tokenization-service-to-add-stellar-as-second-public-blockchain/

Nium joins Circle Payments network

Nium and Circle have partnered to connect USDC stablecoin settlement with last-mile fiat payouts in over 190 countries, integrating stablecoin rails with Nium’s global real-time payments network. For treasury and cross-border payments teams, this combination of regulated stablecoin liquidity with local currency delivery represents a meaningful upgrade to correspondent banking corridors.

https://www.finextra.com/pressarticle/109961/nium-joins-circle-payments-network

Regulation & Policy

Press Release: FDIC Board Approves Proposal to Address Bank Secrecy Act and Sanctions Compliance Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers

The FDIC board has approved a proposed rulemaking to establish Bank Secrecy Act and sanctions compliance standards specifically for FDIC-supervised stablecoin issuers, proposing that such institutions pre-clear AML actions with FinCEN. This is the first U.S. bank regulator to propose a dedicated AML compliance framework for stablecoin issuers, and it will shape how banks structure any stablecoin programs going forward.

https://content.govdelivery.com/accounts/USFDIC/bulletins/41889d8

Piero Cipollone: Money in the digital age

ECB Executive Board member Piero Cipollone delivered a speech on ‘Money in the Digital Age,’ signaling continued ECB attention to how digital money — including stablecoins and the digital euro — is reshaping monetary architecture. Remarks from an ECB board member on this topic carry direct policy weight for European banks navigating MiCA compliance and digital euro preparations.

https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp260528_1~7bb2eecfe5.en.html

Sarah Breeden: Modernising money and markets

Bank of England Deputy Governor Sarah Breeden delivered a speech titled ‘Modernising Money and Markets’ at City Week 2026, outlining the BoE’s framework for how tokenisation and digital money fit within its financial stability mandate. This speech is essential reading for UK financial institutions planning tokenized deposit or stablecoin initiatives under the evolving regulatory perimeter.

https://www.bis.org/review/r260526b.htm

Research & Analysis

Project Agorá shows how tokenisation can improve wholesale cross-border payments; work will advance to real-value testing

The BIS has published the full results of Project Agora, its two-year collaboration with seven central banks and over 40 private institutions, demonstrating that tokenized wholesale cross-border payments can settle atomically in seconds while preserving settlement finality in central bank reserves. The project will now advance to real-value testing — a pivotal step that moves tokenized interbank settlement from proof-of-concept to pre-production validation.

https://www.bis.org/press/p260527.htm

Tokenized Money

Bank of Canada joins BIS Project Agorá to test improvements in wholesale cross-border payments

The Bank of Canada has formally joined BIS Project Agora, confirming its participation in real-value testing of tokenized wholesale cross-border payments. Canada’s entry into the real-value testing phase underscores the broadening central bank consensus that tokenized reserve money is a viable path to reforming correspondent banking infrastructure.

https://www.bankofcanada.ca/2026/05/bank-canada-joins-bis-project-agora-test-improvements-wholesale-cross-border-payments

It really is the wrong question. The US monetary system has been two tier for more than a century. Central bank money sits at the top, held only by banks as reserves at the Fed. Commercial bank money sits below, held by households and businesses as deposits. The two tiers settle against each other through the Fed’s payment infrastructure, and the interoperability between them is what makes the whole system work. Tokenization does not collapse that structure. It reproduces it onchain. The question is not which form of money wins. The question is how the two tier logic gets rebuilt with programmable instruments, and who owns the settlement fabric between them.

That is a harder, more interesting problem than the binary. And it is the one the banks that are actually moving have already started solving.

The two tier model, briefly

Allow me to briefly remind you why this structure exists. Reserves at the central bank are the ultimate settlement asset in a national monetary system. They are a direct liability of the Fed, carry no credit risk against any private counterparty, and are the instrument that interbank obligations clear in. Commercial bank deposits are a different instrument. They are a liability of the issuing bank, carry the credit risk of that bank, and function as the day to day medium of exchange for the real economy. The two tiers are connected by the fact that every commercial bank deposit is ultimately backed by that bank’s claim on reserves, and that interbank transfers of deposits settle in reserves at the central bank.

This is not a theoretical design choice. It is actually the structure that allows the system to scale. The Fed does not want to process every consumer payment. Commercial banks do not want to hold all settlement risk directly on a central bank balance sheet. The two tier model distributes credit creation, customer relationship, and liquidity transformation to commercial banks, while keeping the ultimate settlement asset at the central bank. Every functional monetary system in the developed world has some version of it.

When people talk about tokenizing money, what is actually happening is that each of those tiers is getting a new digital instrument. A wholesale central bank digital currency, or a tokenized reserve equivalent, serves the settlement asset tier. Tokenized deposits serve the commercial bank money tier. Stablecoins, depending on how they are structured, sit somewhere on the spectrum between the two, and that spectrum is where most of the analytical confusion lives.

What stablecoins actually are

A dollar pegged stablecoin is a bearer instrument denominated in dollars, fully reserved 1:1 against some combination of short dated Treasuries, reverse repo, and bank deposits. It is not a deposit liability of the issuer, carries no FDIC insurance, and sits in a segregated reserve pool the issuer cannot lend against. Under the GENIUS Act, payment stablecoins can be issued by three categories of entity: insured depository institution subsidiaries supervised by their primary federal banking regulator, federally licensed nonbank issuers supervised by the OCC, and qualifying state-licensed issuers below the size threshold. The largest issuers today — Tether and Circle — are nonbanks, but the framework is deliberately bank-inclusive. A nine-bank G7 consortium that includes Goldman Sachs, Deutsche Bank, BNP Paribas, Citi, and Bank of America has announced a jointly backed stablecoin, and several large banks have signaled they intend to issue under the new framework. USDC and USDT together account for over four fifths of the roughly $316 billion stablecoin market as of Q1 2026, with USDT at roughly $184 billion and USDC at $78 billion. USDC crossed a meaningful threshold recently, capturing 64 percent of adjusted stablecoin transaction volume for the first time since 2019, driven by institutional preference for the regulated instrument under the GENIUS Act framework. The overall market crossed $320 billion in the second quarter.

What makes a stablecoin structurally different from a tokenized deposit is not the peg or the issuer, under GENIUS a bank can issue either, it is the legal characterization of the instrument and the settlement model that follows from it. A stablecoin is a bearer token, fully reserved against HQLA, segregated from the issuer’s balance sheet, not subject to fractional-reserve treatment. A tokenized deposit is a deposit liability of the issuing bank, backed by that bank’s balance sheet, FDIC insured to the limit, fractional reserve, and subject to the bank’s capital and liquidity rules. The settlement model follows from that distinction. A stablecoin transaction is the bearer transfer of a token from one wallet to another. It settles onchain, finally, in minutes. No bank sits between the two parties. Neither party needs to have a relationship with the other’s bank, or indeed with any bank, to receive value. The instrument is designed for use cases where you want dollar exposure without bank credit exposure, or where the two parties to a transaction do not share a common banking infrastructure. That is a real set of use cases. Cross border commerce between parties in jurisdictions where correspondent banking is slow, expensive, or politically contested. Crypto native trading and custody. Onchain settlement of tokenized assets where the payment leg has to match the asset leg atomically. 24/7 programmable payments between entities that are not commercial bank customers of any single bank.

The BIS has been blunt about what stablecoins are not. In its 2025 annual report, it argued that stablecoins do not deliver “singleness of money, elasticity, and integrity,” and should play at most a subsidiary role in the financial system if adequately regulated. That position is defensible as a statement about what you would want the backbone of a monetary system to look like. It is not a statement about whether stablecoins solve any real problem. They solve an obvious problem. They move bearer dollar value across the internet at near-zero cost, instantly, between parties who do not know each other. No existing instrument does that, and that is why the market cap is over $300 billion.

What tokenized deposits actually are

A tokenized deposit is commercial bank money issued onchain. It remains a liability of the issuing bank, carries the credit risk of that bank, remains subject to the same capital, liquidity, BSA, and AML frameworks the bank’s other deposits are subject to, and is fully redeemable against that bank’s balance sheet. What is different is the representation. Instead of a ledger entry in the bank’s core deposit system, it is a token on a permissioned or hybrid blockchain. The token can be programmed. It can move between wallets on the same network in seconds. It can settle against tokenized assets atomically. It can carry metadata that conditions its own movement.

This is the instrument that the global systemically important banks have chosen. JPMorgan’s Kinexys platform (formerly Onyx, launched in 2020) is processing over $5 billion in daily transactions and has moved more than $3 trillion in cumulative volume since inception, much of it in tokenized deposits. JPMorgan’s tokenized USD deposit, now branded JPMD, went live on Base in late 2025, with Polygon, Arbitrum, and Ethereum mainnet on the announced multi-chain roadmap, extending what was an internal settlement asset out into public infrastructure under a permissioned model. HSBC launched tokenized deposit services in Hong Kong and Singapore in 2025, extended to the UK and Luxembourg, and announced expansion to the US (live April 2026) and the UAE in 2026. Citi, DBS, Standard Chartered, and Deutsche Bank all offer or settle on tokenized deposit infrastructure for institutional clients — DBS and Standard Chartered as founding banks of Partior, Deutsche Bank as a euro and dollar settlement bank on Partior since May 2025, and Citi through Citi Token Services. The Cari Network, announced in Q1 2026, is a five bank consortium of regional lenders — Huntington, First Horizon, M&T, KeyCorp, and Old National — building on ZKsync’s Prividium for shared-ledger tokenized deposits across US regional banks.

What tokenized deposits are good for is the universe of use cases where the client has a banking relationship and wants the movement logic of bank money to become programmable. Intraday liquidity across a multinational’s entities. Cross-border intra-bank transfers that currently sit inside the SWIFT messaging model. Delivery versus payment settlement against tokenized securities. 24/7 movement between corporate accounts at the same bank or between banks on a shared network. These are flows where the user wants the credit quality and legal framework of bank money, and wants to keep that relationship with the bank. They want what the bank already provides, with the additional property of being programmable and real-time.

The two instruments are not substitutes

This is the bit that gets lost in the binary framing. Stablecoins and tokenized deposits are not competing products aimed at the same customer. They are different instruments aimed at different flows. A corporate treasurer moving liquidity between the firm’s Luxembourg and New York entities wants tokenized deposits. A crypto native trading firm settling a large OTC trade with a counterparty on a Saturday wants a stablecoin. A US importer paying a Vietnamese supplier may want one, the other, or a hybrid, depending on whether the supplier has a bank relationship, which jurisdictions the flow is crossing, and whether the payment needs to settle against a bill of lading token.

The actual problem is the settlement fabric

Here is where I think the analysis gets structurally interesting and where most of the commentary falls a bit short. If you accept that both instruments will exist, and that they will serve overlapping but non identical use cases, then shouldn’t the question be what does the settlement fabric between them look like? When a stablecoin has to convert into a tokenized deposit, who runs that conversion, at what timing, against what collateral, with what legal finality. When a tokenized deposit at Bank A has to settle against a tokenized deposit at Bank B, and the two banks are on different networks, what does the bridge look like. When a tokenized Treasury is purchased with a stablecoin and needs to settle delivery versus payment, which ledger is the ledger of record and who reconciles if the two legs fail.

This is what Project Agorá at the BIS Innovation Hub has been working on, and it is what the Regulated Settlement Network and Partior and SWIFT’s blockchain trials are all aimed at. It is also what the Fed’s continued interest in a wholesale tokenized settlement asset is trying to answer from the public side. The work is not done. The standards are not set. The legal and operational finality of cross network settlement is still being built. The banks that understand this problem and have a position on how to solve it are the banks that are going to own the settlement layer of the next generation of money. The banks that treat this as a product-selection question and pick tokenized deposits or stablecoins as though the choice is terminal are one layer too shallow in the analysis.

The historical analogy here is the money market fund era of the late 1970s and 1980s. Regulation Q capped the interest rate banks could pay on deposits. Money market funds offered a substitute that paid market rates. Banks lost a huge amount of deposit share to MMFs before the regulatory response caught up. Critically, the structure that eventually stabilized was not banks beating MMFs or MMFs replacing banks. It was coexistence, with a new settlement and redemption fabric that allowed household and institutional money to flow between bank deposits and MMF shares continuously, depending on the relative economics. Banks that fought the existence of MMFs lost ground. Banks that built products and services that interoperated with the new instrument class kept the customer relationship. The MMF episode produced decades of eurodollar, sweep account, and money market deposit account innovation that became core bank products. The technology changed but the two tier logic did not.

It feels like the same pattern now. Stablecoins are the money market fund of this cycle. Tokenized deposits are the deposit side response. The eventual steady state is coexistence with a functioning settlement fabric between them, and the economics will flow where the economics flow based on use case. The banks that fight this by trying to kill stablecoins or refusing to build tokenized deposits are gonna repeat the 1980s, slowly. The banks that build a position on both, with a clear point of view on the settlement architecture between them, are running the 2026 version of what Citi and Chase were running in 1985.

Ok, so what should banks actually do?

The practical implication is pretty unglamorous. Every bank with a corporate franchise needs a tokenized deposit program, because that is what defends the client deposit relationship when the client starts programming their treasury. Every bank that services onchain counterparties, or that wants to service them, needs a stablecoin capability, either directly by issuing one, by partnering with an issuer, or by providing the bank rails that support a stablecoin issuer. Those are not competing programs. They are two capabilities in the same payments stack.

Above both, the bank needs a settlement layer that can move a client between the two instruments, reconcile across networks, and do it with the same legal and operational finality it can deliver today on a wire. That is the orchestration work. It is also where most bank programs are still, at best, a couple years behind.

I really think the binary framing is a distraction. It lets people think the strategic question is which instrument to back. I believe the actual strategic question is whether you have a position on the settlement fabric, and whether you are helping to build it or letting someone else build it on top of your balance sheet?

The two tier system is not going away. It is gonna get rebuilt in tokens. Feels like the banks that understand that are hiring for it. The banks that are still debating about which one to pick are the banks that are going to have to settle for running one rail inside somebody else’s orchestration layer.

References

The two tier monetary system and BIS framing

• BIS 2025 Annual Economic Report, Chapter III — the next-generation monetary and financial system

• BIS 2025 Annual Economic Report — full PDF

• BIS press release — next-generation monetary system based on tokenised unified ledger (June 24, 2025)

• BIS Bulletin No. 73 — Stablecoins versus tokenised deposits: implications for the singleness of money

• CMS analysis — BIS on stablecoins, tokenised deposits, and singleness of money

• Federal Reserve — history of central bank reserves and the two-tier system

Stablecoin market data

• Stablecoin Insider — Q1 2026 stablecoin report ($316B market cap)

• Bitrue — Stablecoin trends May 2026: USDT vs USDC, market cap, GENIUS Act

• KuCoin — Stablecoin liquidity hits $320.6B milestone, May 2026

• DefiLlama — live stablecoin market cap, supply, and peg data

• Arkham Intelligence — how stablecoins reached a $300B market cap

• Analytics Insight — USDC captures 64% of adjusted stablecoin transaction volume (Mizuho data)

• Bloomberg — stablecoin transactions hit record $33 trillion in 2025, led by USDC

• Stablecoin Insider — how USDC overtook USDT in volume in 2026

GENIUS Act and US stablecoin regulation

• White House fact sheet — Trump signs GENIUS Act into law (July 18, 2025)

• Latham & Watkins — The GENIUS Act of 2025: stablecoin legislation adopted in the US

• Sidley Austin — The GENIUS Act: a framework for US stablecoin issuance

• OCC Bulletin 2026-3 — GENIUS Act regulations notice of proposed rulemaking

• Morgan Lewis — GENIUS Act implementation, key proposals, and what comes next

• World Economic Forum — how the GENIUS Act works and its global impact

JPMorgan Kinexys and JPMD

• J.P. Morgan — Introducing Kinexys (platform overview)

• J.P. Morgan — JPMD USD deposit token available for institutional clients

• CoinDesk — JPMorgan’s tokenized dollars are quietly rewiring how Wall Street moves money (Dec 2025)

• Ledger Insights — JPMD goes live on Base public blockchain

• Atomic Wallet — what JPMD is and how it works on Base

• Unchained — JPMD on Base and why big banks prefer deposit tokens over stablecoins

• CoinDesk — JPMorgan rebrands Onyx blockchain platform to Kinexys (Nov 2024)

• PYMNTS — Kinexys broadens FX reach with GBP blockchain rollout

HSBC tokenized deposit service

• HSBC — tokenized deposit service launches in the United States (April 13, 2026)

• Treasury Management International — HSBC launches new cross-border tokenised deposit service

• PYMNTS — HSBC makes “big bets” on blockchain with tokenization expansion (2025)

• PYMNTS — HSBC extends tokenized deposit service to US firms (2026)

• Cointelegraph — HSBC to launch tokenized deposits in US and UAE in 2026

• Khaleej Times — HSBC’s tokenised deposit move set to transform UAE banking by 2026

Citi, DBS, Standard Chartered, Deutsche Bank, and Partior

• Citi — Citi Token Services and 24/7 USD clearing for institutional clients

• CNBC — Citi debuts deposit and trade services on blockchains for institutional clients

• Banking Dive — Citi launches token service for institutional clients

• PYMNTS — Citi argues tokenized deposits belong at the core of finance

• Ledger Insights — Deutsche Bank joins Partior as euro and dollar settlement bank (May 2025)

• Citi — landmark fiat-to-digital currency payment settlement workflow trial with SWIFT

Cari Network (US regional bank tokenized deposit consortium)

• Bloomberg — US banks build tokenized deposit network to guard their turf (Feb 18, 2026)

• CoinDesk — US regional banks build tokenized deposit network on ZKsync to rival stablecoins

• Ledger Insights — Huntington, First Horizon, M&T prep to test Cari deposit token network

• Ledger Insights — Cari adopts ZKsync Prividium blockchain

• ZKsync — Cari Network case study: tokenized deposits for the US banking system

• Cari Network — team and leadership (Eugene Ludwig, former US Comptroller of the Currency)

• BusinessWire — Cari forms strategic partnership with Tassat to accelerate tokenized deposit network

• Banking Exchange — regional banks join forces to launch blockchain payment network

Project Agorá and the settlement fabric

• Project Agorá — BIS Innovation Hub project page

• BIS press release — Project Agorá launch (April 3, 2024)

• BIS — Project Agorá FAQ

• Ledger Insights — 41 institutions join BIS Project Agorá

• Ledger Insights — how Project Agorá aims to tokenize correspondent banking

• Ledger Insights — Citi, JPM, and others complete RSN tokenization settlement trials

• Yahoo Finance — SWIFT moves to blockchain settlement with live trials

• CCN — SWIFT’s shared ledger on Linea: 24/7 global payments architecture

The historical analogy of regulation Q and the money market fund era

• Federal Reserve History — Interest Rate Controls (Regulation Q)

• Federal Reserve History — Money Market Mutual Funds

• Wikipedia — Regulation Q (deposit interest caps and phase-out 1981-1986)

• Wikipedia — Money market fund

• ICI — History of Rule 2a-7 and the evolution of money market fund regulation

• Richmond Fed — Money market fund reform working paper

This matters right now because the US and Europe have made opposite bets on who should issue tokenized money and what legal protections should surround it. Europe is building a digital euro. The US has said, in about as many words, “absolutely not” and has instead written rules for private stablecoins. The stablecoin market crossed $300 billion in late 2025. Nine crypto native firms have received OCC national trust bank charters (most still conditional), with more applications in the pipeline. Both paths will reshape competition in banking. Neither is obviously right. And I think the structural risks in each approach are poorly understood even by most people in the industry.

The European approach is upgrade the plumbing, preserve the banks

The ECB is developing a retail digital euro. The preparation phase ran through October 2025, with enabling legislation expected in 2026, a pilot around mid 2027, and possible issuance by 2029. Separately, the ECB has launched wholesale CBDC projects (Pontes and Appia) for interbank settlement. On top of this infrastructure, banks would issue tokenized deposits, so your commercial bank money represented as tokens on a distributed ledger, with the same deposit insurance and regulation that applies today.

The EBA published a report on tokenized deposits in December 2024 that should worry anyone banking on this timeline. Out of 85 surveyed banks, one had a live tokenized deposit product in the EEA. One. About 17% expected to engage within two years. The rest were waiting.

The architecture preserves the two tier banking system while upgrading it to run on programmable infrastructure. European bankers keep their role, but they need to build. If they don’t offer tokenized deposits, licensed stablecoin issuers under MiCA will. Circle obtained an EMI license from France’s ACPR in July 2024, allowing it to issue USDC and EURC across the EU. It’s pretty clear that competition is already in the market.

The American approach is let the private sector figure it out

On January 23, 2025, Trump signed an executive order prohibiting federal agencies from developing or promoting a CBDC. The concern was surveillance. Congress broadly agreed. Instead, the US built rules for private stablecoins. The GENIUS Act became law on July 18, 2025, permitting three types of issuers. 1) subsidiaries of insured depository institutions, 2) OCC supervised non banks, and 3) state chartered issuers under $10 billion in circulation. Implementing regulations are due by July 2026.

Then came the charters. Since early 2025 the OCC has been processing a wave of national trust bank applications from crypto-native firms, and the approvals have been fast. Anchorage Digital, which received its conditional charter in 2021, is now fully operational as the only nationally chartered crypto bank. Erebor Bank received conditional approval in October 2025 and final charter approval in February 2026. On December 12, 2025, the OCC approved five more at once: Ripple and Circle (as First National Digital Currency Bank) as de novo charters, plus BitGo, Fidelity Digital Assets, and Paxos converting from state trust companies. Bridge (the Stripe subsidiary) got conditional approval in February 2026. Crypto.com followed shortly after.

These are trust bank charters, not full commercial bank licenses. The firms can’t take deposits, can’t access FDIC insurance, can’t borrow from the discount window. What they get is federal supervisory legitimacy under the OCC, preemption of state by state money transmitter licensing, and, because national banks are required to be Federal Reserve members, eligibility for Fed master accounts. The Bank Policy Institute, representing traditional banks, has argued that these novel charter institutions shouldn’t automatically qualify as “depository institutions” under the Federal Reserve Act. But the legal default favors them as nationally chartered banks.

Why convenience will win and what that means for deposits

There’s an old idea in monetary economics that bad money drives out good, people will hoard gold coins and spend debased ones. In a digital payments world I think the dynamic runs the other way. Consumers optimize for convenience. They’ll move to whatever system is cheapest and most frictionless and stop caring whether the money inside it is safe. If you think about PayPal, Venmo, M-PESA, Alipay etc, there are hundreds of millions of people already hold monetary IOUs from non bank companies with weak regulatory protections. Why? Well, because the payments work and nobody reads the fine print.

That’s really the dynamic the US has now turbocharged. The GENIUS Act creates a regulated stablecoin market where newly chartered trust banks will issue, custody, and settle tokenized dollars that compete directly with bank deposits for payments and programmable finance. If stablecoins offer faster and cheaper payments, and running on 24/7 blockchain rails, then we can expect some portion of deposits will migrate. The OCC charter wave means the firms capturing those flows won’t be startups with uncertain regulatory status. They’ll be federally supervised institutions with national charters.

In Europe, the architecture is explicitly designed to prevent this. The digital euro provides the settlement layer; banks provide the deposit layer. MiCA requires overcollateralization of stablecoins, with custody asset values exceeding outstanding token values. Banks keep issuing money. Stablecoins compete on the margin.

In the US, the structural protection for bank deposits doesn’t exist. Which means the strategic question for US banks isn’t whether stablecoins will compete with them. It’s really how much market share they’ll lose, and how fast.

What happens when a stablecoin issuer fails

Bank deposits survive bank failures. Deposit insurance covers the first $250,000. The Fed acts as lender of last resort. Prudential regulation limits risk-taking. This is the infrastructure that makes bank money reliable in a crisis.

Stablecoins, even GENIUS Act compliant stablecoins issued by OCC trust banks, have none of this. No FDIC insurance. No discount window. No lender of last resort. Reserve requirements and federal oversight, yes. But what happens in bankruptcy?

When a company enters bankruptcy, the automatic stay freezes everything. Creditors can’t withdraw. Under the pari passu rule, stablecoin holders get lumped in with every other unsecured creditor. The Celsius bankruptcy showed what this looks like: in January 2023 a court ruled that crypto in Celsius’s Earn accounts was property of the bankruptcy estate, not the depositors’. About $4.2 billion in accounts became unsecured claims. The court applied the logic of the 1848 English case Foley v. Hill, which holds that money deposited with a bank belongs to the bank.

Bankers might dismiss Celsius as a sketchy crypto lender. But the legal principle applies broadly. A GENIUS Act trust bank issuing stablecoins with full reserves could face the same automatic stay in bankruptcy. The GENIUS Act’s reserve and custody requirements may function as structural separation that keeps customer assets outside the estate, or they may not. That question hasn’t been tested in court. Japan offers a useful comparison: after Mt. Gox, Japan mandated strict asset segregation for crypto firms. When FTX collapsed in November 2022, Japanese customers got their money back in three months while US customers were still in line.

Whether the GENIUS Act’s protections are strong enough to produce a Japan like outcome or a Celsius like one is something we won’t know until there’s a failure. And with over $260 billion in USDC and USDT alone, the stakes when that test comes will be large.

The SVB problem, but multiplied across borders

In March 2023, Circle had about $3.3 billion in reserves at Silicon Valley Bank. When SVB failed, USDC briefly traded at $0.8774. The depeg reversed only because the FDIC covered all SVB deposits, including uninsured ones. The stablecoin was only as safe as the bank holding its reserves, and most USDC holders had no idea which bank that was.

This is the correspondent banking fragility at the heart of stablecoin architecture. It’s worth considering there’s a bit of a multi issuance problem. USDC is one brand but it’s issued by different legal entities in different jurisdictions, under MiCA in Europe and the GENIUS Act in the US. Which entity’s reserves back your specific tokens? If you need to redeem, who are you redeeming against?

The equivalence frameworks between MiCA and the GENIUS Act, the mechanisms for cross border regulatory recognition, are underdeveloped. For banks that custody stablecoins or lend against them as collateral, this is basically a credit risk problem dressed up as a technology question.

AML should be keeping compliance up at night

Chainalysis reported $154 billion in illicit crypto volume in 2025, with stablecoins accounting for 84% of it, up from 63% the prior year. The specific instrument both jurisdictions are building their regulatory frameworks around is also the preferred vehicle for illicit finance. Banks touching this ecosystem need blockchain analytics capabilities most of them haven’t invested in yet.

Two paths to Fed access

The OCC trust bank charters carry Fed access as part of the package. As nationally chartered banks, these institutions are required to be Federal Reserve members and are generally eligible for master accounts, giving them direct access to Fedwire. That’s not the skinny master account, that’s the front door.

The skinny master account is a separate pathway, designed for state chartered entities that don’t have an OCC charter. In October 2025, Fed Governor Christopher Waller proposed limited purpose accounts with settlement access but no discount window, no interest on reserves, and probable balance caps, restricted to firms with a state SPDI or similar charter. The Fed is targeting a broader Q4 2026 rollout.

The distinction matters because of what happened with Kraken and Custodia, two Wyoming SPDIs that went after the same thing and got opposite results. Custodia applied for a master account in 2020 and was denied by the Kansas City Fed in 2023, during a period when Tier 3 access (for eligible but federally uninsured institutions) was effectively unobtainable. The district court upheld the denial. The 10th Circuit affirmed in October 2025. Custodia is seeking en banc review.

Kraken Financial, also a Wyoming SPDI, applied in the same period but got its answer in a different political environment. On March 4, 2026, the Kansas City Fed approved a limited purpose master account for Kraken, making it the first crypto firm in history with direct Fedwire access. The approval is deliberately constrained: no interest, no emergency lending, one year initial term, and it serves as a pilot for the broader skinny account framework. The Fed classified Kraken as Tier 3, only the third institution at that tier ever approved.

So there are now two routes to Fed settlement for crypto native firms. OCC trust banks get it through membership. State chartered SPDIs can get it through the skinny account pathway that Kraken just proved works. Either way, these firms no longer depend on commercial banks for access to the payment system. That removes the correspondent banking vulnerability exposed in the SVB episode. It also removes a revenue stream for bank with the fees that correspondent banks earn for providing that access. For the largest custody and clearing banks, the competitive implications of a dozen newly chartered institutions with direct Fed access should be getting attention at the board level.

What’s still missing

A properly designed tokenized money system needs three things. First, a regulatory charter for payment issuers with genuine structural separation of customer funds and clear resolution procedures. Second, open access to central bank settlement. Third, governance: an institutional framework for how stablecoin dollars, tokenized deposits, and traditional bank money coexist as all three scale.

The US is making real progress on the first two. The GENIUS Act provides the charter; the OCC is filling it with institutions. OCC trust banks get Fed access through membership; state chartered SPDIs now have the Kraken precedent and the skinny account rollout targeting Q4 2026. Governance remains completely absent. Nobody is really coordinating how these parallel monetary systems will interoperate.

The EU has more of the architecture on paper. The digital euro provides settlement. MiCA provides the charter. The ECB provides governance. But with one live tokenized deposit and most banks waiting, the architecture is largely theoretical at this point.

The BIS’s Project Agora, with seven central banks and 40+ financial institutions, is testing tokenized commercial bank deposits settling against wholesale CBDC. It’s the closest thing to a complete working model. But it’s also a lab experiment.

The cost of financial intermediation in the US has been stuck at 1.5 to 2 percent for over a hundred years. Tokenized money is a bet that technology finally breaks that. The two roads the US and Europe are taking do not look like they are going to be converging anytime soon, and both involve regulatory path dependency: charters granted, infrastructure built, relationships locked in. The decisions being made in 2026 feel like they will be very expensive to reverse by 2030.

Sources

Awrey, Dan. Beyond Banks: The Future of Money. Princeton University Press, 2024.

Chainalysis 2026 Crypto Crime Report. Chainalysis, 2026.

European Banking Authority Report on Tokenised Deposits. EBA, December 2024.

Ferretti, Federico, et al. The Tokenized Economy. Giappichelli, 2026.

GENIUS Act — Congressional Research Service Overview. Signed into law July 18, 2025.

In re Celsius Network LLC, No. 22-10964 (Bankr. S.D.N.Y. 2023).

Custodia Bank v. Federal Reserve Board of Governors, No. 24-8024 (10th Cir. 2025).

Federal Reserve Governor Waller: “Skinny” Master Account Proposal. Mayer Brown, October 2025.

Federal Reserve targets Q4 2026 for skinny master account rollout. Troutman Pepper, December 2025.

Kraken becomes first digital asset bank to receive a Federal Reserve master account. Kraken Financial, March 4, 2026.

Kraken receives Fed master account, in a first for crypto. Banking Dive, March 2026.

OCC Announces Conditional Approvals for Five National Trust Bank Charter Applications. OCC, December 12, 2025.

Erebor Bank approved for conditional federal bank charter. CoinDesk, October 2025.

Crypto.com receives conditional OCC national trust bank charter. Banking Dive, 2026.

Stablecoin market tops $317 billion. MEXC, January 2026.

Philippon, Thomas. “Has the US Finance Industry Become Less Efficient?” American Economic Review 105, no. 4 (2015): 1408–1438.

Regulation (EU) 2023/1114 — Markets in Crypto-Assets (MiCA).

Trump, Donald J. “Strengthening American Leadership in Digital Financial Technology.” Executive Order, January 23, 2025.

The instruments are arriving at industrial scale. The GENIUS Act, signed in July 2025, created the first federal framework for payment stablecoin issuers. The OCC published proposed implementing rules in February. The OCC conditionally approved national trust bank charters for Circle, Paxos, BitGo, Ripple, and Fidelity Digital Assets in December. A consortium of ten global banks, Citi, Deutsche Bank, Goldman, UBS, BofA, MUFG, Barclays, TD, Santander, and BNP, is exploring jointly issued stablecoins pegged to G7 currencies.

And it’s not just stablecoins. Treasury funds passed $5 billion in market value in March; BlackRock’s BUIDL alone is over $2.8 billion. Franklin Templeton’s Benji crossed $1 billion. Citi Token Services and Partior are running tokenized deposits in production for institutional clients. In April, Securitize and Computershare opened the path for US-listed equities to be issued in tokenized form, sitting alongside the certificates Computershare already keeps for more than half the S&P 500. Tokenized real world asset value crossed $26 billion in March, four times the year before. The wallet that catches a stablecoin is the same wallet that catches all of this. Stablecoins are the leading edge, they are the tip of the spear as I’m fond of saying.

Sound money is the prerequisite, and you need the instruments before you need anything else.

But most banks are not going to be issuers. They are going to be receivers, and the vast majority have no way to receive a stablecoin when one arrives. At a panel at the Chicago Fed last October, a room full of senior bankers was asked how many had ever used a crypto wallet. Not a single hand went up. These are the people running the institutions where the stablecoins are going to land.

The issuance problem is being solved, by JPMorgan, SoFi, Circle, Tether, and a growing list of bank consortia. How those instruments actually reach and move through the other 3,900 banks in the US, the hundreds of banks in Europe, the thousands across Asia and Latin America, that part is still missing.

What credit cards already taught us

I’ve been thinking about how stablecoins are replaying the early credit card market. In the early 1960s, credit cards were American, dollar denominated, and concentrated among a handful of issuers. BankAmericard was a Bank of America product. Diners Club, American Express, and Carte Blanche were each single firms. You could have made every argument about credit cards in 1965 that people make about stablecoins today: it will stay an oligopoly, it will stay dollar dominated, network effects will entrench the early movers.

The prediction was right about the network layer and wrong about everything underneath it. Visa and Mastercard remain a duopoly. Visa has 4.9 billion payment credentials in circulation as of mid-2025, Mastercard has more than 3 billion. Underneath those two networks, thousands of financial institutions issue cards across every currency on earth.

What changed was where the concentration sat. Bank of America launched BankAmericard in Fresno, California in 1958 and began licensing it to other banks in 1966. A consortium of California banks, Wells Fargo, Crocker, United California Bank, and Bank of California, formed the Interbank Card Association the same year, which became Mastercard. In 1970, Bank of America gave up direct control of BankAmericard, transferring it to a cooperative owned by the issuing banks (renamed Visa in 1976). The structural move was to separate the act of issuing from the act of accepting. The networks consolidated. The issuers fragmented. When you walk into a department store in Tokyo and pay with an Indonesian debit card, the merchant doesn’t care about the issuer. The merchant cares about the network mark on the card. That’s where the trust sits. The acceptance network made the issuer interchangeable, and making the issuer interchangeable is what made thousands of issuers possible.

Stablecoins have no equivalent. The GENIUS Act regulates the issuer. The market argues over which token will win. Nobody has built the acceptance layer that makes the identity of the issuer irrelevant to the institution receiving the payment.

Today the right to redeem a stablecoin at par sits with a tiny set of authorized participants. Circle has 521 of them for USDC, Tether has 6 for USDT. Everyone else has to find a secondary market or a willing intermediary. That’s the acceptance gap, expressed in numbers.

The wallet is the acceptance layer

So what should a bank that isn’t JPMorgan or SoFi actually do?

Get a wallet. An address on one or more public blockchains, with the bank custodying the keys and the customer seeing the balance through familiar interfaces. The pragmatic move at this point is to treat it as a sidecar architecture, a parallel ledger that connects to the existing core through adapters. A multi chain wallet sits next to the bank’s legacy systems and lets it participate in tokenized money without forcing a full core replacement. It requires only the recognition that tokens on chains are going to be part of the financial plumbing, and that the institution needs a bridge between its existing core and that world. Getting connected matters more than being right about which chain or token wins. The financial outlay is modest compared to building a new payment rail or launching a stablecoin program, and the bank ends up covered against most of the plausible futures.

A bank joining a multi chain wallet network in 2026 is doing what a bank joining Visa in 1970 did. You didn’t need to be right about which cards would dominate. You needed to be inside the network when the volume came.

Barclays seems to have understood this. In January 2026, the bank invested in Ubyx, a clearing system for digital money designed to turn stablecoins and tokenized deposits into cash for receiving institutions. The framing from Barclays’ head of digital assets was the interoperability imperative. Infrastructure without interoperability is just an expensive silo. The right question is whether the institution can receive and process whatever arrives.

The ATM network economics

There’s a commercial case here that goes beyond hedging. Every foreign stablecoin that arrives at a bank’s wallet is an FX conversion opportunity. The bank catches the dollar stablecoin, converts it to local currency for its customer, and earns the spread.

The Visa and Mastercard networks didn’t just solve card acceptance at merchants. They also rewired global ATM economics. By the 1990s, every retail bank on earth had connected its ATMs to Visa Plus or Mastercard Cirrus. The reason was FX. Every foreign card that walked up to a local ATM produced an FX conversion the local bank captured, plus a network interchange fee. A US tourist pulling €200 out of a BBVA machine in Madrid generated FX margin and interchange that BBVA captured without underwriting the card or knowing anything about the issuer. The bank just had to be on the network.

That’s the wallet trade. The US is pumping dollar denominated stablecoins into every market on the planet. A bank in Singapore that catches a USDC transfer for its corporate client and converts it to Singapore dollars earns FX revenue on a flow that would previously have moved through correspondent banking rails where the margin was already compressed. Cross border payment flows exceeded $190 trillion in 2023 and are heading toward $290 trillion by 2030. Even a small fraction of that moving to stablecoin rails is real money for the institutions that can catch it.

The wallet pays for itself in FX revenue. Everything else is upside.

Receive before you issue

The instinct in banking is to own the liability, to be the issuer. That instinct is sound. Banks are balance sheets, and issuing is what balance sheets do. But for the roughly 3,900 US banks that aren’t JPMorgan, I think the right first move is to receive rather than issue.

A bank that issues a stablecoin today faces an immediate distribution problem. Where can the coin be accepted? Who can redeem it? What happens when it crosses a border? Without a mutualized acceptance network, the issuing bank has to build bilateral relationships with every receiving institution. A bank that implements a wallet and starts receiving whatever stablecoins arrive learns the operational reality first: custody, compliance screening, conversion, settlement. It builds the muscle. And it earns FX from day one. Issuance can come later, once the acceptance infrastructure exists to support it.

There's a structural reason the receiving bank wins. Stablecoins move the asset; they don't move the risk. Whoever catches the inbound stablecoin and provides the local currency deposit holds the redemption risk and provides regulated deposit insurance to the holder. Tokenization shifts which institution performs that function. The function remains. That's a banking function and it always has been.

There’s a deposit flight dimension too. The 820 million active crypto wallets that existed in 2025 are mostly unhosted, sitting outside the regulated financial system. If a bank’s customers want to hold stablecoins and the bank doesn’t offer a wallet, those customers will use MetaMask or Phantom or Coinbase. The deposits leave because the bank offered no alternative. The wallet is the minimum viable move to keep customers inside the perimeter.

Central bankers see the same thing from a different angle. If you’re the governor of Bank Negara Malaysia and foreign stablecoins are entering your economy, where do you want them to land? On unhosted wallets you can’t see, or on wallets provided by your regulated banks, where the flows are visible and conversion to local currency is automatic? Every central bank running that calculus arrives at the same answer.

Banks don’t need to pick a chain

Every ingredient already exists. The chains work, the instruments are being issued at scale, and the regulatory frameworks are forming. What’s missing is coordination.

The industry’s own go to market is making it worse. Every chain walks into a bank and says my chain is the best. Every issuer says accept my coin. Each pitch forces the bank to pick a winner. Banks hate picking winners in technology categories that are still moving. A chain evaluation can take three years inside a large institution. Multiply that by fifteen chains pitching fifteen different stories and the bank ends up doing nothing.

The better approach is to stop asking banks to choose and start asking them to connect. A multi chain wallet lets the competition between tokens and chains play out after the bank is connected, not before. Visa understood this in the 1960s. The smart move for a bank wasn’t to build its own proprietary card that only worked at merchants it had signed individually. The smart move was to join the network. The banks that became co-owners of Visa and Mastercard before the IPOs captured enormous value because they chose the collective infrastructure over the proprietary instrument.

The open question is whether the new tokenization consortia reach critical mass before fragmenting. Cari Network, Project Keystone, the nine-bank European group, the ten-bank G7 consortium are all placing bets, and not all of them will clear. The wallet move hedges that question. A bank with a multi chain wallet doesn’t need to predict which consortium wins. It just needs to be reachable from whichever does.

I think the same pattern is forming now. The institutions that move early to build acceptance infrastructure will own a piece of the plumbing through which trillions of dollars eventually flow. The ones still running chain evaluations will find the network was built around them while they were still in committee.

The instruments are here. The acceptance layer is the next move. The banks that get a wallet will be well positioned to catch what comes next.

References

Legislation and regulatory sources

• GENIUS Act (S.1582), signed July 18, 2025

• OCC proposed rulemaking implementing GENIUS Act, issued February 25, 2026

• OCC conditionally approves five national trust bank charter applications — Circle, Paxos, BitGo, Ripple, Fidelity Digital Assets (December 12, 2025)

Market data and institutional activity

• Stablecoin transactions rose to record $33 trillion in 2025, up 72% YoY (Artemis Analytics via Bloomberg)

• Stablecoins reach $321B market cap as of May 3, 2026 (CoinSpectator); Stablecoin Market Cap Live Data (DefiLlama)

• Cross-border payment flows and projections — exceeded $190 trillion in 2023, projected $290 trillion by 2030 (Visa)

• Kinexys 2026 Milestones: Fund Flow, JPM Coin on Base, Leadership and More — $3 trillion cumulative, $5 billion daily average

• JPMorgan launches JPM Coin (JPMD) on Base for institutional clients

• SoFi launches SoFiUSD stablecoin (December 2025)

• SoFi and Mastercard partner to enable SoFiUSD settlement across Mastercard’s global network (March 3, 2026)

• Fidelity launches FIDD stablecoin on Ethereum (February 4, 2026)

• Nine European banks building MiCA-compliant euro stablecoin — ING, UniCredit, KBC, Danske, DekaBank, Banca Sella, SEB, CaixaBank, Raiffeisen Bank International (September 25, 2025)

• UBS, PostFinance, Sygnum, Raiffeisen, ZKB, BCV launch CHF stablecoin sandbox (April 8, 2026)

• Ten global banks explore G7 stablecoin consortium — BNP Paribas, Santander, BofA, Barclays, Citi, Deutsche Bank, Goldman, MUFG, TD, UBS (October 2025)

• Barclays invests in Ubyx to advance digital money connectivity (January 7, 2026)

Tokenized assets beyond stablecoins

• Tokenized Real-World Asset Value Jumps Fourfold to $26 Billion (PYMNTS, March 2026)

• BlackRock BUIDL Tokenized Treasury Fund — over $2.8B AUM (Securitize)

• Securitize and Computershare announce agreement to enable tokenized shares for U.S. issuers (April 29, 2026)

• Securitize, Computershare open path for $70 trillion in U.S. stocks to move onchain (CoinDesk)

Card network data

• Visa Fiscal 2025 Annual Report — 4.9 billion payment credentials in circulation

• Mastercard cards in circulation — over 3 billion active cards globally

• Visa Inc. Wikipedia — BankAmericard 1958, NBI cooperative 1970, renamed Visa 1976

• Mastercard Wikipedia — Interbank Card Association formed 1966 by Wells Fargo, Crocker, United California Bank, and Bank of California

Bullish to acquire Equiniti from Siris in $4.2 billion transaction, creating the global transfer agent for tokenized securities

Bullish has agreed to acquire Equiniti, a global transfer agent processing $500B annually, for $4.2 billion — combining its tokenization stack with legacy securities registry infrastructure. The deal is one of the largest crypto-to-TradFi acquisitions on record and signals that tokenized securities will require traditional settlement plumbing to scale.

https://www.bullish.com/us/news-insights/bullish-to-acquire-equiniti-from-siris-in-4-2-billion-transaction-creating-the-global-transfer-agent-for-tokenized-securities

State Street Investment Management and Galaxy Digital Bring Cash Management Onchain

State Street Investment Management and Galaxy Digital have launched the State Street Galaxy Onchain Liquidity Sweep Fund on Solana, enabling institutional investors to automatically sweep idle stablecoins into a yield-bearing tokenized money market vehicle. The product represents a major traditional asset manager bringing cash management fully on-chain for the first time.

https://www.businesswire.com/news/home/20260505800898/en/State-Street-Investment-Management-and-Galaxy-Digital-Bring-Cash-Management-Onchain

SoFi to launch its stablecoin on Solana, citing speed and cost

SoFi Bank, a nationally chartered U.S. bank, is launching SoFiUSD — a fully reserved dollar stablecoin on Solana — marking one of the first bank-issued stablecoins to enter the market. The move illustrates how chartered banks are moving beyond observation into direct stablecoin issuance.

https://www.theblock.co/post/400098/sofi-to-launch-its-stablecoin-on-solana-citing-speed-and-cost

Western Union launches USDPT stablecoin issued by Anchorage on Solana

Western Union has launched USDPT, its Solana-based stablecoin issued by Anchorage Digital and powered by Fireblocks infrastructure, targeting cross-border agent settlements across its global network. The launch by a 175-year-old payments institution signals that incumbent remittance operators view stablecoin rails as a strategic necessity, not a novelty.

https://www.theblock.co/post/399890/western-union-launches-usdpt-stablecoin-anchorage-solana

FINRA green lights Securitize for tokenized IPO underwriting and custody

FINRA has approved Securitize to conduct tokenized IPO underwriting, custody, and atomic settlement — making it the first broker-dealer cleared for the full tokenized securities stack. Paired with Jump Trading as market maker and Jupiter for access, Securitize is assembling a complete regulated trading venue for on-chain equities.

https://www.theblock.co/post/399895/finra-green-lights-securitize-for-tokenized-ipo-underwriting-and-custody

Regulation & Policy

Negotiators brush off bank concerns with stablecoin-yield compromise

Senators Tillis and Alsobrooks brushed off bank industry objections to the CLARITY Act’s stablecoin-yield compromise, saying they ‘agree to disagree’ with bank lobbyists. The standoff — with banking associations warning the provision risks deposit flight while Senate negotiators hold firm — sets the terms for a pivotal markup expected in May.

https://www.americanbanker.com/news/negotiators-brush-off-bank-concerns-with-stablecoin-yield-compromise

DTCC sets October launch for tokenized securities platform in Wall Street blockchain push

The DTCC has confirmed a July pilot and October full launch for its tokenized securities platform, with more than 50 firms from both TradFi and digital asset sectors joining the industry working group. With $114 trillion in custodied assets under its umbrella, DTCC’s timeline transforms on-chain securities settlement from pilot into scheduled market infrastructure.

https://www.coindesk.com/business/2026/05/04/wall-street-giant-dtcc-plans-tokenized-securities-platform-with-july-pilot-october-launch

Brazil imposes partial ban on stablecoins, crypto for cross border payments and FX

Brazil’s central bank has banned stablecoins and crypto from regulated cross-border payment and FX settlement channels, a significant policy restriction that runs counter to the trend of stablecoin adoption in cross-border corridors. The move is a meaningful data point for regulators and banks assessing sovereign risk in digital payment infrastructure.

https://www.ledgerinsights.com/brazil-imposes-partial-ban-on-stablecoins-crypto-for-cross-border-payments-and-fx/

Research & Analysis

The impact of stablecoins on the international monetary and financial system

A new BIS publication examines how widespread stablecoin adoption could reshape the international monetary and financial system, with particular concern for emerging market and developing economies. Using the framework of international currency functions, the paper argues stablecoins are most likely to substitute for foreign cash holdings — with significant implications for dollar dominance and EMDE monetary sovereignty.

https://www.bis.org/publ/bppdf/bispap170.htm

FEDS Note: Banks in the Age of Stablecoins: Lessons from Their Historical Responses to Financial Innovations

A Federal Reserve FEDS Note draws on banking history to assess how stablecoins may affect bank funding and deposit structures, as stablecoin market cap moves from the periphery to the center of U.S. policy debate. The paper offers regulators and bank executives a historically grounded framework for assessing the deposit-substitution risk that now dominates the CLARITY Act debate.

https://www.federalreserve.gov/econres/notes/feds-notes/banks-in-the-age-of-stablecoins-lessons-from-their-historical-responses-to-financial-innovations-20260501.html

Tokenized Money

Chiara Scotti: Digital money and the architecture of trust

Bank of Italy Deputy Governor Chiara Scotti, speaking at a joint Bank of Italy/ECB workshop on digital assets and monetary policy transmission, addressed the architecture of trust required for digital money. Her remarks, alongside a related Bank of Italy call to explore tokenized SEPA payments, signal growing European central bank engagement with tokenized payment rails at the infrastructure level.

https://www.bis.org/review/r260505d.htm

I suspect what the market has begun to notice is that the Big Three are sitting on platforms built between 1977 and 1989, before the world wide web was invented, and now money is becoming programmable. JPMorgan has cleared $2 trillion in notional value through Kinexys. Citi runs Token Services across its own branches. Partior, the bank owned consortium platform, has been doing atomic cross bank settlement of tokenized deposits in multiple currencies since 2021. The GENIUS Act, signed in July 2025 and taking effect in January 2027, gave payment stablecoins their own federal regulatory category. None of the dominant US cores were built for any of this. Most legacy cores were not designed to represent tokenized instruments as first class objects, with token specific lifecycle states, wallet ownership, rail aware settlement, programmability, and real-time control logic.

What stands out to me more than anything is this is the last large enterprise software category without a serious AI native challenger at scale, and that is surely going to change. But I doubt AI alone is the forcing function. Programmable money creates the architectural gap. AI may simply change the economics of closing it.

The cloud shift that never quite happened

The Big Three platforms in production today were built between the late 1970s and the late 1980s. Fiserv Premier launched in 1978. FIS Systematics in 1977, FIS IBS in 1980. Jack Henry SilverLake came in 1988. They were the wave that brought banks off the central mainframe and onto IBM mid range computing, and they have been the ledger of record for most US community and regional banks ever since.

Those platforms have run for forty plus years and absorbed every wave of new technology since. They absorbed Y2K, online banking, the 2008 crisis, and the early cloud era as integration layers rather than as triggers for replacement. The Big Three moved hosting models into private cloud, then started talking about AWS and Azure, then acquired or built next generation platforms: Finxact at Fiserv, Modern Banking Platform at FIS, the cloud native deposit core Jack Henry has been building since 2022. Challengers have appeared. Thought Machine won real reference customers including some GSIBs, but none of them broke through to scaled deployment across US community and regional banks. Temenos has won a handful of US deals after probably fifteen years of trying.

Tokenization is a different order of problem. Every previous wave changed how customers interacted with the ledger. Online banking added a web channel. Mobile added a phone channel. FedNow accelerated when the ledger had to update. The ledger itself stayed the same: a row in a database, denominated in dollars, posted overnight in batch. Tokenized money changes what the ledger represents. A tokenized deposit is not just a faster account entry. It is a tokenized representation of commercial bank money, recorded on ledger infrastructure that can support transfer, settlement, programmability, and audit in ways legacy account systems were not designed to handle. It clears in seconds against external rails rather than overnight in batch, carries conditional execution logic the legacy core cannot interpret, and moves in unit values legacy COBOL packed decimal fields cannot natively express. Adding a web channel to a 1980s core is an integration project. Making a 1980s core understand tokenized deposits is basically a rebuild.

The reason core banking has absorbed every previous wave without losing its franchise is that the moat was never really the product. The moat was everything around it. A typical US community bank core sits behind 30 to 60 vendor integrations, none of which migrate cleanly. Big Three contracts run seven years with termination fees that can run into eight figures. Working with Premier or Horizon requires platform specific knowledge that has no market outside it. The bank technology consultancies have hundreds of millions of dollars of practice revenue tied to Big Three migrations, and the analysts who cover the category are funded in part by the same vendors.

The moat works for the customer too. Many bankers have scare tissue since roughly only 30% of full core migrations have succeeded over the past decade. A regional bank CIO who renewed Premier or IBS in 2023 made a defensible call. Stable operations was the right answer for the conditions of the time. However, the conditions of the time are now changing.

What the Big Three just admitted

The clearest evidence that the conditions are changing is that the incumbents are themselves announcing it. Each of the Big Three has now shipped, or is shipping, a program that signals its existing platforms cannot do what banks need them to do over the next decade.

Start with Fiserv. In January 2026, Fiserv announced a strategic collaboration with Microsoft. Microsoft 365 Copilot rolls out across the Fiserv workforce. Microsoft Foundry on Azure becomes the platform for embedded AI, with stated targets across fraud detection, customer service, and operational efficiency. Fiserv has run more than 100 billion tokens through Foundry already, and 8,000 of its engineers are using GitHub Copilot. None of that is fake. Also none of it is a description of agents running production workloads inside customer cores. It is a platform partnership and an internal productivity push, with the client facing AI workloads on the future deliverables side of the slide.

FIS is a little more interesting. FIS has run two tokenization related plays in 2026, and they really tell you everything about the architectural problem. The first, in January, was an agentic commerce offering with Visa and Mastercard, tied to FIS’s $13.5 billion acquisition of Global Payments’ Issuer Solutions business. The pitch was that issuing banks can stay top of wallet when AI agents start initiating transactions on customers’ behalf. Real product, but card network side, and orthogonal to the core ledger.

The second came on April 29, when FIS announced Lyriq, a platform purpose built for regulated banks to issue, manage, and settle tokenized deposits, stablecoins, and CBDCs while keeping the deposits on the bank’s own balance sheet. The next day, FIS announced Project Keystone, the first major Lyriq deployment: a bank administered network with five super regional founding members (Citizens, Fifth Third, Huntington, KeyBank, M&T) plus an unnamed sixth. Lyriq feels like the most consequential thing FIS has done in years, and it is also a sidecar. The single most important sentence in the Lyriq announcement is the one that says

“works with existing core banking systems, regardless of technology provider.”

To me the architectural signal is clear that the fastest path to tokenized deposits is not a full replacement of the existing core. It is a parallel digital money layer that works across cores. That may be commercially smart, but it also tells you where the legacy architecture ends. You have to smile at how the architecture admission is the platform itself.

Jack Henry have perhaps been the most disciplined of the three. Shanon McLachlan, the COO, described their recent work as “below the waterline,” foundational engineering rather than visible AI features. He also flagged a fact that’ll make every Big Three customer take a pause. Most legacy core systems use COBOL packed decimal fields fixed at two decimal places. The Jack Henry deposit core was rebuilt with nine decimal precision, which lets it natively express USDC and tokens that move in finer denominations. The bigger issue is what sits underneath the decimal point. Legacy cores treat balances as dollar denominated rows. They have no concept of a token as a distinct data type. JPMorgan, when it built Kinexys, did not extend its existing core. It built a new ledger, I suspect because the old one could not represent the instruments it needed to issue.

There’s a consistent pattern here across all three. The procurement framework gets built first, because both sides need it. So the vendor needs AI revenue for investors, the customer needs AI spend for the board. The actual deployment of agents into core workflows comes later, and “later” is not really a defined date. The Big Three’s AI work is not fake. Jack Henry’s foundational engineering in particular feels real. But bolting AI on top of an engine designed for nightly batch posting does not make it AI native. And building a sidecar around a core that cannot handle tokenization does not make the core able to handle tokenization. It just kicks the can down the road.

Why the gap is now urgent

I don’t think the urgency is that every community bank will suddenly lose retail deposits to stablecoins. To me, the first order threat is commercial operating balances, treasury flows, escrow balances, settlement accounts, liquidity sensitive corporate relationships, and tokenized asset settlement activity moving toward institutions that can operate in programmable settlement environments.

For the last two decades of my career, the answer to “when will core banking get rebuilt?” was always “soon.” Soon has kept slipping, but I think this time is structurally different, for three reasons.

First, programmable money is no longer hypothetical, and it is no longer one thing. Tokenized deposits, onchain claims against an FDIC insured bank balance, are running at JPMorgan, Citi, and Partior. Payment stablecoins, bearer instruments backed 1:1 by reserves, are running at Circle (USDC, $78 billion), Tether, Paxos, and Ripple. Different instruments with different legal characters, but both rely on a regulated bank somewhere underneath, either as the issuer of the tokenized deposit or as the holder of the stablecoin reserves. The GENIUS Act requires every payment stablecoin issuer to operate under either a bank charter, a federal trust charter, or an approved state regime. In December 2025, the OCC conditionally approved national trust bank charters for Circle, Ripple, Paxos, BitGo, and Fidelity Digital Assets. Coinbase and Stripe’s Bridge are pending. The stablecoin issuers are not bypassing the banking perimeter. They are entering it.

Yes today’s volume is still small. Fewer than 5% of corporate treasurers reported investing in digital assets in 2025. But Tradeweb’s 2026 corporate treasurer survey found 25% moderately to very interested in tokenized money market funds, 19% in stablecoins. McKinsey’s base case puts tokenized market cap at $2 trillion by 2030. A regional bank with $50 billion in deposits that loses 2% of its corporate balance over a five year window is staring at a billion dollar deposit migration. This is my back of envelope sizing of the forcing function, and I think the trajectory is only going one way.

Second, the Big Three have telegraphed that the next migration cycle is open. Once Fiserv, FIS, and Jack Henry have all said publicly, in different ways, that their existing cores need to be augmented, replaced, or sidecar’ed, the customer’s question changes. It is no longer “do I migrate?” It is “to what?” That question has been closed since 1989. It is open now in a way it has not been since the late 1970s.

Third, the tools to actually rebuild this now exist. Tessera has compressed SAP S/4HANA migrations that historically ran $250 million and three years into months. DataMigration.ai took an 18 month bank data migration and shipped it in four. Neither is a full stack core banking replacement, and no question core banking is harder than ERP, harder than data migration, harder than enterprise software broadly. But AI has demonstrably collapsed the cost and timeline of analogous enterprise modernization work in the last two years, and my bet is that the same pattern will transfer to banking. The proof point of an AI native Tier 2 bank core in production is still ahead, not behind. A serious challenger has to deliver one to make the rest of this real.

What the new core has to be

So in my mind, the AI native US core banking platform of 2030 is going to need five things. I don’t believe any are particularly speculative in isolation. JPMorgan has assembled the closest working version inside its own walls. Building it as a product the rest of the industry can buy is a big venture opportunity.

The first is a programmable balance sheet. By that I mean a ledger that represents tokenized instruments as a first class data type, can execute conditional settlement logic at the core layer, and clears coherently across two distinct kinds of external rail: real-time payment networks like FedNow and RTP on one side, programmable chains like Base, Ethereum, Solana, and Canton on the other. JPMorgan has built this for internal flows on Kinexys. Partior has built it for cross bank settlement among consortium members. What is not yet solved at production scale is atomic settlement between an arbitrary bank’s deposit ledger and a public chain without a trusted intermediary. The current options, HTLCs, trusted bridges, notary schemes, cross-chain protocols like Chainlink CCIP, all have tradeoffs. The institutional alternative is a unified ledger model, which is what the BIS is exploring with Project Agorá. Whichever architecture wins, the bank with a programmable balance sheet becomes a settlement endpoint for the tokenized economy. The bank without one accepts being routed around as the price of the existing architecture.

The second is a real-time evented ledger. The deposit ledger has to post in real time, not in nightly batch. Every state change is an event with a stable schema, durable history, and reversibility. This is what makes everything else possible. Programmable money does not work in batch, intraday liquidity is invisible without continuous balance visibility, and agents cannot react to a ledger that updates once a night. Today, most US bank cores simulate real-time on top of batch through caching layers and shadow ledgers, which is a solved problem until it isn’t, at which point reconciliation breaks publicly. Rebuilding the ledger as event-sourced from the ground up is the foundation underneath the other four properties.

The third is agent configurable operations. Big Three implementations cost what they cost because the work is fragmented across specialists in compliance, payments, deposits, lending, and reporting, sequenced by a program management office that bills hourly. Coding agents can collapse that fragmentation. Agents can ingest a bank’s tenant configuration, reconstruct the rules in plain English, reconcile against integration feeds, and generate a configuration draft in days rather than quarters. The same pattern works for ongoing operations: changing a comp rule, adding a new product, reconfiguring a workflow.

The fourth is a bank owned data layer. The bank’s own data, accessible directly by the bank’s own agents, through a real-time event stream and APIs that are not gated behind separate purchase agreements or token pools. The current architecture treats the customer as a tenant whose data the vendor controls, which made sense when integration was expensive and direct database access was a security risk. It does not make sense in a world where the bank wants its own agents to operate against its own customer data, and where its corporate clients want their agents to settle programmable transactions against the bank’s ledger. The bank owns the data, the vendor operates the platform, and the architecture has to distinguish them.

The fifth is agent grade controls. As banks deploy agents across compliance, operations, treasury, and customer service, "agent" becomes a first class principal type alongside human roles. A KYC agent should see customer onboarding data, not the trading book. A treasury agent should see intraday positions, not employee payroll. The technical pattern, scoped tokens with auditable trails, is an extension of existing IAM rather than a new category, but the data model has to be designed for it from the start. The same control plane has to handle the regulatory side. The compliance surface around banking, BSA/AML, OFAC, fair lending, CRA, the EU AI Act and MiCA for institutions with European operations, plus the new GENIUS Act layer for payment stablecoins, is expanding faster than most compliance team can track manually. An AI native architecture pulls regulatory monitoring into the core release cycle, with an agent that flags what needs to change and routes the update through human approval. The same stack, the same permissioning, one audit trail across the whole system. Difficult to retrofit into a platform built around quarterly release cycles, and natural to build into one designed for continuous deployment.

How do we get there, and why this is different

I think the entry point matters more than the endpoint. The right wedge is probably the one Capital One ran on payments infrastructure. Do not fight the incumbent renewal, rather sell into the adjacent budgets that are not locked. A bank’s core contract is typically locked for seven years, but its real-time payments program, FedNow integration budget, compliance technology spend, and data and analytics budget are not. A scoped project that delivers FedNow native settlement, AI driven compliance monitoring, or real-time GL reconciliation across the existing core can be sold cleanly into one of those budgets. By the time the core renewal opens, the challenger is already inside the bank, integrated with the existing core, and delivering value the CIO can point to. The question stops being “rip and replace your core.” It becomes “expand what is already working into the renewal we were going to negotiate anyway.”

The Big Three are not going to sit still. I expect aggressive bundling, with the core renewal packaged with payments processing, debit network economics, BSA/AML, and digital banking. I expect to see steep multi year discounts on renewals that happen to land in the middle of a challenger’s evaluation. I expect some FUD from the analyst firms and consulting partners with nine figure Big Three practices to protect. Expect contractual friction on data portability when a bank tries to extract its own tenant. None of those moves address the underlying architectural problem, but any one of them can easily slow a design partner deal by a quarter or more.

All of this is why the core is so different from any other software replacement. The core is a regulated balance sheet system. A core banking outage is not a productivity problem, it is a 24 hour news cycle and a regulatory examination. Stability beat modernity, and stability is what the Big Three sold. I think now stability requires modernity. CIOs who renewed for seven years in 2023 are sitting on contracts that expire in 2030, and between now and then their bank has to support real-time payments, programmable money, and AI in production. The architecture they renewed onto cannot do those things, and the vendor’s answer is a consolidation program that pushes them onto the next generation platform anyway.

The sidecar approach definitely buys time, but it does not buy architecture. Banks already run multiple specialty cores in parallel for mortgage servicing, wealth, and treasury, so adding a tokenization stack is not architecturally novel. What makes the tokenization sidecar different is that, unlike mortgage servicing, the deposits being moved through it are the same deposits the core ledger holds. Reconciliation between the two systems remains an operational burden. Intraday liquidity management still requires the core to participate, because the deposit balance lives in the core. As tokenized volume scales, the sidecar becomes a parallel system of record, and the bank ends up running two cores instead of one.

Project Keystone has a second problem that bank consortium models have run into repeatedly. The pattern is not necessarily that consortia always fail, but it’s that they struggle when value depends on broad counterparty adoption before any single participant gets enough standalone utility. Closed networks need every counterparty to join before they reach critical mass, and the previous decade is littered with bank consortium blockchain initiatives that failed to clear that bar: Marco Polo, We.Trade, Vakt, Komgo, Contour, B3i. Partior is the one that worked, and it took five years and a JPMorgan/DBS/Standard Chartered consortium to get there. Five super regional banks plus an unnamed sixth is a real start, but it’s not yet a network. The treasurer who needs to settle a tokenized payment between a Project Keystone bank and a non-Keystone counterparty has to fall back to dollar rails or use a stablecoin issuer with broader reach. The bank's tokenization capability fails to compete for that transaction.

In a community bank somewhere right now, an operations analyst is reconciling a discrepancy between the FedNow settlement file and the overnight GL post by hand, in a spreadsheet. In another bank, a relationship manager is explaining to a corporate client that the bank cannot settle the client's payment in tokenized form. The client routes the payment through their JPMorgan account instead, the one they opened for exactly this kind of thing. That conversation is going to happen more and more every quarter.

Someone is going to build the system that replaces both these pieces of work, and the bank that buys it first will spend the next decade taking corporate relationships from the banks that didn't.

References

Core banking market structure and concentration

• Federal Reserve Bank of Kansas City (April 2024). Market Structure of Core Banking Services Providers.

• Engage fi (2025). Core Banking Modernization Part 2: The Big Three.

• SDK.finance (April 2026). Best Core Banking Software Providers 2026.

Big Three modernization programs

• Everest Group (January 2026). The Great Core Banking Shakeup.

• CCG Catalyst (December 2025). Earnings Roundup: Fiserv, FIS, and Jack Henry.

• Finopotamus (April 2026). GAC 2026: Core Conversations with Fiserv, Jack Henry and Pediment.

• Fiserv (January 8, 2026). Fiserv Collaborates with Microsoft to Accelerate AI-Driven Innovation.

• FIS (April 29, 2026). FIS Launches New Platform Giving Banks Control Over Digital Money. Lyriq launch.

• FIS (April 30, 2026). FIS and Leading Financial Institutions to Build Their Own Digital Tokenized Money Network. Project Keystone.

Programmable money and tokenized settlement

• JPMorgan Kinexys. Kinexys Pilots First USD-Denominated Deposit Tokens (June 2025).

• The GENIUS Act (2025). S.1582 - GENIUS Act. Effective January 2027.

• OCC (December 12, 2025). OCC Conditionally Approves Five National Trust Bank Charter Applications. Conditional approvals for Circle, Ripple, Paxos, BitGo, Fidelity Digital Assets.

• Partior. Partior platform overview. Bank-owned consortium platform doing atomic cross-bank tokenized deposit settlement since 2021.

• BIS (2024-2026). Project Agorá. Seven-central-bank tokenized cross-border settlement project.

• Citi. Citi Token Services. Live in US, UK, Singapore, Hong Kong as of 2025.

• Tradeweb (April 2026). 2026 ICD Portal Client Survey.

• ABA Banking Journal (March 2026). Tokenized deposits: the future of tokenized money for financial market settlement. Cites McKinsey $2 trillion forecast.

Enterprise modernization comparables

• Tessera Labs (2026). Tessera platform overview. Multi-agent AI for ERP modernization.

• DataMigration.AI (2026). Global Bank Core Banking Migration Case Study. 18-month migration in 4 months, 8 AI agents.

• Backbase (January 2026). AI Core Banking Integration: Strategies That Scale. Industry data: 30% of full migrations succeed.

Visa stablecoin settlement hits $7 billion run rate as pilot expands to nine blockchains

Visa expanded its stablecoin settlement pilot to nine blockchains including Base, Polygon, Canton, Arc and Tempo, with annualized volume reaching $7 billion — a 50% quarterly increase that demonstrates growing institutional adoption of blockchain payment rails.

https://www.theblock.co/post/399405/visa-stablecoin-settlement-hits-7-billion-run-rate-pilot-expands-nine-blockchains

‘Tokenize the world’: Securitize partners with Computershare to bring more stocks onchain

Securitize partnered with Computershare to enable tokenized share issuance for publicly listed companies, potentially bringing trillions in U.S. equities on-chain through the world’s largest transfer agent and registrar.

https://www.theblock.co/post/399390/tokenize-world-securitize-computershare-to-bring-more-stocks-onchain

JPMorgan Taps Former Goldman Exec to Lead Blockchain Unit

JPMorgan appointed former Goldman Sachs executive Oliver Harris to lead its Kinexys blockchain division, signaling the bank’s commitment to growing institutional adoption of tokenized payment and settlement infrastructure.

https://www.bloomberg.com/news/articles/2026-04-28/jpmorgan-taps-former-goldman-executive-to-lead-blockchain-unit

FIS introduces platfrom to give banks control over digital money

FIS launched Lyriq, a platform enabling banks to issue and manage their own digital money including tokenized deposits and digital currencies while keeping deposits on their balance sheets — addressing a key regulatory concern for traditional banks.

https://www.finextra.com/pressarticle/109643/fis-introduces-platfrom-to-give-banks-control-over-digital-money

Regulation & Policy

Singapore revisits bank prudential restrictions on permissionless blockchains

Singapore’s Monetary Authority launched a consultation on revised prudential rules for banks using permissionless blockchains for tokenized assets and stablecoins, offering lighter-touch alternatives to previously proposed restrictions.

https://www.ledgerinsights.com/singapore-revisits-bank-prudential-restrictions-on-permissionless-blockchains

ECB signs agreements with European standard setters to facilitate digital euro payments

The European Central Bank signed agreements with European standard setters to facilitate digital euro payments infrastructure, advancing technical preparations for the potential CBDC rollout across the eurozone.

https://www.ecb.europa.eu//press/pr/date/2026/html/ecb.pr260424~202f9d832b.en.html

Research & Analysis

Digitalisation and innovation - opportunities and risks for financial health

The Bank for International Settlements published research on digitalisation and financial health, examining how digital innovation enhances access to payments and financial services while creating new vulnerabilities including fraud and data privacy risks.

https://www.bis.org/fsi/fsibriefs31.htm

Cryptoasset service providers as financial intermediaries: risks and policy approaches

BIS released analysis on cryptoasset service providers as financial intermediaries, detailing how major platforms now offer banking-like services including lending and derivatives, requiring enhanced regulatory frameworks and risk management approaches.

https://www.bis.org/fsi/fsipapers27.htm

Tokenized Money

Czech Central Banker Says Bitcoin May Help Bolster Reserves

Czech Central Bank Governor Ales Michl stated that adding Bitcoin to official reserves could improve portfolio performance, making the Czech Republic the latest central bank to seriously consider digital asset diversification.

https://www.bloomberg.com/news/articles/2026-04-28/czech-central-banker-says-bitcoin-may-improve-reserve-portfolio

Joachim Nagel: The digital euro - anchoring Europe’s strategic autonomy in a digital future

Bundesbank President Joachim Nagel delivered a keynote on the digital euro as key to Europe’s strategic autonomy in digital payments, emphasizing the importance of sovereign digital currency infrastructure for financial independence.

https://www.bis.org/review/r260428f.htm

The American banking lobby is currently paddling hard at the first wave. As the Senate Banking Committee markup approaches, the North Carolina Bankers Association has been circulating a script urging member banks to call Senator Thom Tillis’s office and demand that the CLARITY Act include an airtight prohibition on anything “economically or functionally equivalent” to interest on stablecoin balances. The argument is that if a crypto exchange can pay 4% on a stablecoin balance, depositors will leave checking accounts and the community deposit franchise will erode. Treasury Secretary Scott Bessent is urging the Senate to pass the bill. Senators are taking meetings and it’s not like the pitch is incoherent.

I doubt it’s the smallest wave in the set.

Depositors have been able to find 4% elsewhere for three years. Money market funds now hold more than $7.6 trillion, according to ICI weekly data. The share of US deposits that are non interest bearing has fallen sharply since their March 2022 peak, with call report analysis showing a cumulative drop of more than thirty percent at US banks, before a single stablecoin paid a cent of yield. The rate competition is already happening, and banning one channel for it will, at best, just slow the trend. What the lobbying ignores is the structure forming behind the first wave: a fully programmable investment stack, atomic by default, risk calibrated to each user’s preference, accessible from the same wallet that holds stablecoins, and sitting ready to soak up every dollar that used to be idle.

The first wave: stablecoin yield

The wave the banking lobbying is designed to break is a real one, and we should name it precisely. A stablecoin pays no yield. A money market fund holding Treasuries pays 4%. If a user can hold a stablecoin balance at a venue where the venue (or an affiliated distributor, or a loyalty program) will share the underlying T-bill yield with them, the stablecoin starts to behave like a yield bearing checking account. That is the mechanism the banks are asking Congress to block.

The pitch seemingly assumes two things. It assumes this is the main channel through which depositors will access onchain yield. And it assumes blocking that channel closes the gap. I suspect neither of those is correct. Even inside the current perimeter, the yield bearing substitute is already emerging in a different form that GENIUS and CLARITY do not reach, because it is not a stablecoin.

JPMorgan’s deposit token, JPMD, which launched to institutional clients on Coinbase’s Base network in November 2025 and is heading to Canton in phases through 2026, can legally pay interest. It can pay interest because it is a bank deposit, not a stablecoin. Kinexys has processed more than $3 trillion in cumulative notional value since inception, with average daily transaction volume now above $5 billion. The same logic applies to Citi’s tokenized deposit infrastructure, to Partior’s USD, EUR, and SGD settlement rail, and to Fnality’s utility settlement coins. The banks building atomic settlement infrastructure for commercial bank money can offer yield inside the regulatory perimeter. The prohibition the community banks are asking for does not stop their largest competitors. It’ll actually stops smaller banks from competing with the megabanks on equal terms.

So even as a wave one defense, the script feels to me like it’s self harming. Community banks are asking Congress to fortify the beach in a way that keeps JPMorgan dry while the tide rises around them. But fine, grant them the prohibition. Assume the CLARITY Act passes exactly as written, airtight, no carve outs. What happens next is not that depositors stay put. What happens next is that the second wave arrives, and the second wave is bigger.

The second wave: tokenized money market funds

The tokenized Treasury and money market fund category has grown from roughly $5.5 billion at the start of 2025 to more than $13 billion by early April 2026, according to RWA.xyz data. Circle’s USYC is at $2.9 billion. BlackRock’s BUIDL is at $2.5 billion. Ondo’s USDY is at $1.9 billion. Franklin Templeton’s BENJI, which launched in 2021 and was the first SEC-registered mutual fund to use a public blockchain as its system of record, crossed $1 billion in March 2026. These are not pilots and they are not demos. They are live mutual funds holding Treasuries, Treasury bills, and repos, issuing ERC-20 style tokens that represent shares, and paying yield directly to holders through rebase mechanics or share issuance.

Franklin Templeton recently made two of its institutional money market funds, LUIXX and DIGXX, blockchain compatible. The LUIXX modifications let it hold short term Treasuries and meet stablecoin reserve standards. DIGXX offers an onchain share class with 24/7 settlement. The firm manages $1.7 trillion in AUM and now deploys Benji across ten blockchains, including Canton. Sandy Kaul, head of innovation at Franklin Templeton, said it recently

institutions will migrate to these rails because they will be able to post less operational capital, since immediate settlement eliminates the need to fund 24 hour plus settlement cycles.

It’s worth reading that sentence again, because it is the entire argument. A tokenized money market fund is not a novelty. It is a better checking account. It holds T-bills, so it pays something close to the T-bill rate. It settles atomically against stablecoins or deposit tokens, so moving in and out is a matter of seconds rather than days. It is accessible from the same wallet that holds the user’s stablecoin balance. It is available 24/7. There is no float to lose, no settlement window to bridge, no reason not to sweep idle cash into it at every opportunity.

The CLARITY Act does not reach this. BUIDL is a security. BENJI is a mutual fund. These instruments are regulated under the 1940 Act, and they already pay yield, and they already settle onchain, and they already compose with stablecoin balances. When a CFO’s treasury platform can automatically sweep excess cash into a tokenized MMF at the end of each payment cycle and redeem it at the start of the next one, then how long before the non interest bearing corporate operating account stops existing as a category?

That sweeping is not hypothetical. Ripple’s GTreasury acquisition in October 2025, at a $1 billion valuation, was explicitly positioned around this capability. The platform handled $13 trillion in payments volume for Fortune 500 clients and SMEs in 2025, and in April 2026 Ripple added Digital Asset Accounts that let corporate treasurers hold and manage stablecoins and digital assets alongside cash, with tokenized MMF and repo integrations on the roadmap.

This is the wave the banks should actually be worried about, and the current lobbying script does nothing about it.

The third wave: tokenized equities

Behind the tokenized MMF wave is a larger one still. On March 18, 2026, the SEC approved Nasdaq’s framework to trade tokenized securities alongside traditional shares, with settlement through DTC. Earlier in March, Intercontinental Exchange announced a strategic investment in OKX at a $25 billion valuation, securing a board seat and granting OKX’s 120 million users access to NYSE tokenized equities. Robinhood’s CEO described tokenized stocks as “a freight train.” Kraken’s xStocks platform has processed more than $25 billion in cumulative trading volume since launching in June 2025 and plans to expand from 100 to over 500 tokenized equities by the end of this year.

The SEC approval is the inflection. Until March, every major tokenized equity product available to retail investors operated under Regulation S, which excluded US investors entirely. The instruments were designed for emerging-market retail and for non-US institutional access. Nasdaq’s approved framework brings tokenized equities inside the US regulatory perimeter for the first time, covering certain listed equities and ETPs that are eligible for the DTC tokenization pilot. The race between Nasdaq and ICE for the tokenized portion of the $152 trillion global equity market, per WFE end-2025 data, is the most consequential piece of financial infrastructure competition since electronic trading replaced open outcry.

For the deposit franchise, the mechanism is the same as with tokenized MMFs, just one risk step along the curve. A user with a stablecoin balance can, in the same wallet, hold tokenized MMF shares (low risk, Treasury bill yield), tokenized investment grade credit (slightly higher), tokenized equities (higher still), and tokenized alternatives if they want. The risk calibration is continuous. The settlement is atomic. The movement between them is free. The reason to leave cash sitting in a non interest bearing checking account disappears not because interest becomes available on the cash itself, but because the cost of not deploying the cash drops to nearly zero. There is no longer any settlement friction to justify the idle balance.

The fourth wave: everything else

The fourth wave is RWAs writ large. Tokenized private credit, tokenized real estate, tokenized commodities, tokenized alternative funds. This is the wave that is still forming, far enough out that its shape is uncertain, but the institutional investment behind it is not. BlackRock, Franklin Templeton, and Apollo have all launched tokenized funds. DTCC has selected Canton as its tokenization network for traditional instruments. BNY, State Street, Goldman, and HSBC are each building variants of the same product stack. Nasdaq’s framework is explicit about extending beyond equities over time.

The point is not that every asset gets tokenized on a five year horizon. The point is that the direction of travel is toward a single wallet holding a continuously rebalanced portfolio of tokenized instruments, with the user’s cash position dynamically allocated to whatever risk return profile they want, with atomic settlement making the allocation friction free. At that point the concept of a “bank deposit” as a distinct thing becomes a specialized product, chosen for the FDIC insurance and the bank’s credit, not because it is the default place where working capital sits.

This is what the bank lobbying misses I think. The prohibition on stablecoin yield is written as if the game ends at wave one. The game does not end there. Waves two, three, and four are already forming, they are being built by the largest asset managers on the planet, they have SEC approval where they need it, and they do not rely on stablecoins paying interest. They rely on tokenized access to every rung of the risk-return curve, composable with each other, atomically settled, available from the same interface.

The deposit franchise was never about rate

There is a version of this argument the banks can still win, but it requires abandoning the one they are currently having. The deposit franchise, the thing the bank lobbyists are trying to protect, was never primarily about rate competition. Banks have always been able to out pay money market funds when they needed to, via brokered CDs, high yield savings accounts, or promotional rates for specific deposit tiers. The franchise was about friction. It was about the fact that the operating account of a small business, the corporate treasury balance of a mid market firm, the municipal deposit of a school district, the payroll account of a hospital, all of these sat with a specific bank because moving them was expensive, slow, and risky. Idle balances stayed idle because deploying them was not worth the settlement cost.

Atomic settlement removes the friction that kept the idle balances in place. Tokenized MMFs and tokenized securities create the destinations those balances will flow into. The stablecoin yield question is a sideshow. Even if you concede the community banks’ lobbying fight in its entirety, the underlying plumbing has already changed. The corporate treasurer does not need an interest bearing stablecoin. The corporate treasurer needs an overnight tokenized MMF sweep that settles atomically from their operating wallet. That product exists. It is live. Fortune 500 clients are using it.

Non interest bearing deposits at US banks fell by more than 30% from their March 2022 peak without any of this being available yet. The next leg of decline is not going to come from depositors chasing 4% yield on stablecoins. It is going to come from the disappearance of the idle balance as a concept. The treasurer who used to hold $50 million in a USD nostro account to pre-fund tomorrow’s FX leg now settles atomically, holding the $50 million in local currency until the moment of execution. The broker dealer who used to park cash collateral overnight now accepts continuously rebalanced tokenized Treasuries. The corporate AP system that used to hold three days of working capital in anticipation of payment cycles now sweeps every cent into a tokenized MMF until the moment it is needed.

Each of these changes takes a pool of non interest bearing balances off the bank’s balance sheet, not because the depositor got a better rate, but because the depositor no longer needs the balance to sit. The funding does not just get more expensive. It disappears. The replacement funding is term debt, wholesale funding, or rate-paying deposits, all of which compress net interest margin in ways the idle-money subsidy did not.

What the script likely gets backwards

The worst thing about the bank lobbying is not that it picks the wrong fight, though it probably does. It is that the fight they are picking is likely accelerating the substitution. If stablecoin yield is prohibited, the product that replaces idle deposits will not be an interest bearing stablecoin. It will be a tokenized MMF sweep that settles atomically against a non yielding stablecoin. The MMF pays the yield, the stablecoin provides the rails, and the user cannot tell the difference. The prohibition forces the substitute into exactly the form that the banks cannot touch, because it is a security, not a payment instrument, and the CLARITY Act is not a securities statute.

This is the same structural pattern that took apart SMS revenue for the telecoms. Global operator messaging revenue peaked around 2012 at roughly $120 billion, per Strategy Analytics and Informa forecasts at the time. Telcos lobbied, threatened to throttle OTT traffic, argued that WhatsApp was freeloading on their infrastructure. A Mobilesquared analysis found that some operators raised international SMS rates by more than 500% as they tried to defend the revenue line, which accelerated the migration. The carriers that survived were the ones that let the messaging layer go and priced the data that ran underneath. The carriers that kept trying to regulate the price of a substitute riding on structurally better economics lost both the substitute and the larger fight. I wonder if the bank lobby is writing an SMS carrier script in 2026. The result feels like it will rhyme.

I don’t think every wave in this set breaks at once. The tokenized MMF wave is already breaking. The tokenized equity wave is cresting now, post SEC approval. The tokenized alternatives wave is still forming. The banks that are building atomic settlement infrastructure for their own clients, JPMorgan, Citi, Goldman, HSBC, the DTCC consortium on Canton, are paddling hard, but they are paddling in the right direction. They are building the products that will be on the other side of this set. The banks lobbying for the CLARITY prohibition are paddling into the first wave with their backs to everything behind it.

The deposit franchise was built on the assumption that money sits still between use cases. Atomic settlement removes the reason for it to sit, and tokenized investment rails provide the destination for it when it moves. The cost of funding for US banks is going to rise, and it is going to rise regardless of what the statute says about stablecoin yield. The lobbying is choosing which wave to get hit by first.

The set is already in the water. The ones that see it are going to paddle the channel around. The ones that don’t are about to get held under.

References

Legislation and regulatory sources

• GENIUS Act: White House fact sheet on Trump signing GENIUS Act into law, July 18, 2025

• SEC Release No. 34-105047: Order approving Nasdaq rule change for trading tokenized securities, March 18, 2026

• Eleanor Terrett reporting on NCBA lobbying script (Twitter/X, April 18, 2026, via BeInCrypto)

• FinTech Weekly on CLARITY Act draft text with “economically or functionally equivalent” language, March 2026

• DL News: “White House economists say stablecoin yields are fine. Banks are having none of it,” April 2026 (on Bessent’s support for the CLARITY Act)

Deposit and money-market fund data

• ICI weekly money market fund assets release, April 16, 2026 ($7.64 trillion)

• BauerFinancial: “Bank Deposits Migrate into Interest-Bearing Accounts,” January 2026 (noninterest-bearing deposits down more than 30% since March 2022)

• Curinos Commercial Analyzer: “How To Deal With Declining NIB Deposits”

• Federal Reserve Bank of Kansas City: “Bank Deposit Rates Haven’t Kept Pace with Yields on Other Investments”

Tokenized asset market data

• RWA.xyz: tokenized US Treasury and MMF AUM data, April 2026

• Kraken blog: “Celebrating 100 xStocks,” March 18, 2026 (100 products, $25B volume, 500 target)

• Kraken blog: “xStocks surpasses $25 billion in total transaction volume,” February 19, 2026

• JPMorgan press release: “JPM Coin (JPMD) USD Deposit Token Available for Institutional Clients,” November 12, 2025

• AssetTokenization.com: “Inside Kinexys,” January 2026 ($3 trillion cumulative, $5 billion daily as of December 2025)

• Partior announcement of Deutsche Bank as strategic investor, November 27, 2024 (confirming USD, EUR, SGD support)

• Franklin Resources preliminary AUM, February 28, 2026 ($1.74 trillion)

• Decrypt: “Franklin Templeton Expands Tokenized Fund Platform to Canton Network,” November 12, 2025

• Ripple press release: “Ripple Breaks into Corporate Treasury with $1B GTreasury Acquisition,” October 16, 2025

• Ripple press release: “Ripple Treasury Launches the First Treasury Management System with Native Digital Asset Capabilities,” April 1, 2026

• Canton Network press release on DTCC-Digital Asset partnership, December 17, 2025

Infrastructure and industry data

• ICE press release: “ICE Makes Investment in OKX, Establishing Strategic Relationship,” March 5, 2026

• CNBC: “Tokenization of assets is freight train coming to markets: Robinhood CEO,” Token2049 Singapore, October 2, 2025

• World Federation of Exchanges FY 2025 market highlights, February 27, 2026 ($151.94 trillion global equity market cap)

Historical analogy sources

• TelecomTV: “Telcos must face up to the reality of declining SMS revenues” (citing Strategy Analytics’ Global Mobile Messaging Forecast that SMS peaked in 2012)

• Mobilesquared: “Sky-high SMS rates damaging long-term opportunity for A2P SMS,” September 2023 (3.9% of operators raised rates over 500%)

DoorDash to offer stablecoin payouts with Tempo in push toward everyday crypto payments

DoorDash partners with Tempo to offer stablecoin payouts to drivers, joining Stripe and Coastal Bank in deploying stablecoin payment flows on the network. This marks a significant expansion of stablecoin adoption in mainstream gig economy payments.

https://www.theblock.co/post/398270/doordash-to-offer-stablecoin-payouts-with-tempo-in-push-toward-everyday-crypto-payments

Nium and Coinbase partner on global stablecoin settlement

B2B cross-border payments provider Nium teams up with Coinbase to enable USDC stablecoin payments across its platform. The partnership signals growing institutional adoption of stablecoins for international settlement.

https://www.finextra.com/newsarticle/47607/nium-and-coinbase-partner-on-global-stablecoin-settlement

How Mastercard plans to settle card payments with stablecoins

Mastercard is testing stablecoin settlement with SoFiUSD to accelerate card transaction clearing, bridging traditional finance and blockchain infrastructure for institutional payments.

https://cointelegraph.com/news/mastercard-stablecoin-settlement-sofiusd-explained

Three Major Japanese Financial Institutions Tap Canton to Bring Government Bonds On-Chain

Three major Japanese financial institutions are using Canton Network to bring government bonds on-chain, advancing institutional tokenization of sovereign debt securities.

https://thedefiant.io/news/tradfi-and-fintech/japanese-tradfi-firms-tap-canton-to-tokenize-government-bonds

OCBC’s Lion Global launches tokenized physical gold fund on public blockchain

OCBC’s Lion Global launches tokenized physical gold fund on public blockchain, expanding institutional real-world asset tokenization beyond traditional securities.

https://www.ledgerinsights.com/ocbcs-lion-global-launches-tokenized-physical-gold-fund-on-public-blockchain/

Regulation & Policy

OCC Issues Updated Model Risk Management Guidance

OCC issues updated model risk management guidance coordinated with Federal Reserve and FDIC, providing clearer frameworks for banks using AI and advanced analytics in risk assessment.

https://www.occ.gov/news-issuances/news-releases/2026/nr-occ-2026-29.html

Hong Kong allows secondary trading of tokenized products, initially focusing on money market funds

Hong Kong allows secondary trading of tokenized products starting with money market funds, creating regulatory framework for institutional tokenized asset markets.

https://www.thestandard.com.hk/finance/article/329792/Hong-Kong-allows-secondary-trading-of-tokenized-products-initially-focusing-on-money-market-funds

UK sets out plan to integrate payments rules covering stablecoins and tokenized deposits

UK Treasury proposes unifying payment rules for traditional services, stablecoins, and tokenized deposits during Fintech Week. The regulatory framework aims to integrate digital payment methods into existing financial infrastructure.

https://www.theblock.co/post/398244/uk-sets-out-plan-to-integrate-payments-rules-covering-stablecoins-and-tokenized-deposits

US senator urges delay of CLARITY Act Senate markup until May: Report

US Senator Thom Tillis urges delay of CLARITY Act Senate markup until May, citing need for more industry input. The postponement reflects ongoing tensions between banking and crypto sectors over stablecoin regulations.

https://cointelegraph.com/news/us-senator-asks-clarity-senate-markup-pushed-back-april

Research & Analysis

BIS says stablecoins act more like ETFs than money, warns of fragmentation without global rules: report

BIS warns that stablecoins function more like ETFs than actual money and calls for coordinated global regulation to prevent fragmentation across the $300 billion market.

https://www.theblock.co/post/398072/bis-says-stablecoins-act-more-like-etfs-than-money-warns-of-fragmentation-without-global-rules-report

Stablecoins: framing the debate

BIS General Manager Pablo Hernández de Cos addresses stablecoin regulatory challenges at Bank of Japan seminar, emphasizing need for international coordination on digital money frameworks.

https://www.bis.org/speeches/sp260420.htm

Piero Cipollone: Sparking the transformation of finance: tokenization and the role of central banks

ECB Executive Board member Piero Cipollone discusses tokenization’s transformative potential for finance and central banks’ role in shaping digital asset infrastructure.

https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp260415~868b59bca9.en.html

Stablecoins not a threat to banks in near term: Moody’s analyst

Moody’s analyst concludes stablecoins pose limited near-term threat to traditional banks due to yield restrictions and robust existing payment infrastructure in developed markets.

https://cointelegraph.com/news/stablecoins-not-a-threat-to-banking-sector-in-the-near-term-moody-s

Tokenized Money

Bank of Korea’s new chief vows to push CBDC, deposit tokens; leaves out stablecoins

Bank of Korea’s new Governor Shin Hyun-song prioritizes CBDCs and deposit tokens while notably excluding stablecoins from his inaugural policy address. The stance reflects his previous skeptical position on private stablecoins during his BIS tenure.

https://www.theblock.co/post/398223/bank-of-korea-new-chief-cbdc-deposit-tokens

Hong Kong awards first stablecoin licenses to HSBC and Standard Chartered

Hong Kong awards its first stablecoin licenses to HSBC and Standard Chartered, marking a milestone in the territory’s digital asset regulatory framework. The licenses enable major banks to issue regulated stablecoins in a key Asian financial center.

https://www.elliptic.co/blog/hong-kong-awards-first-stablecoin-licenses-to-hsbc-and-standard-chartered

These are not pilot programs. These are the institutions that run the plumbing of global finance, and they are rebuilding that plumbing on programmable rails.

I think this is the most important thing happening in banking right now, and I think most bank executives are missing it. Because the conversation inside most banks is still about products: should we tokenize bonds? Launch a stablecoin? Offer tokenized deposits? Those are reasonable questions. But they’re the wrong starting point. The starting point should be infrastructure.

The product trap

Anyone who approaches this as ‘which products are suitable for tokenization’ is likely to make a first principle error. I think the right framing is whether blockchain is a baseline infrastructure layer that cuts across the organization. Not a product. A platform.

When FIs treat tokenization as a product question, the pattern is looks very predictable. Someone in the innovation team runs a pilot. They tokenize a bond, or a repo transaction, or a fund share. The pilot works. There’s a press release. And then not much happens, because the pilot was a product, and products need infrastructure to scale, and the infrastructure doesn’t exist inside the institution yet. So the pilot sits in a sandbox, demonstrating what’s possible without changing how the FI actually operates.

That distinction matters for how FIs allocate capital, structure teams, and think about competitive positioning. Pains me to say this as proud product person, but we have to guard against product thinking leading to small budgets in innovation labs, isolated from the core business. If we have the end in mind, then infrastructure thinking leads to multi-year investment in core systems, organizational redesign, and strategic partnerships. One produces demos. The other produces capability.

McKinsey’s base case for tokenized financial assets (excluding stablecoins and CBDCs) is roughly $2 trillion by 2030. BCG’s estimate, using a broader scope that includes tokenized money, is $16 trillion. The gap between those numbers isn’t an analytical disagreement. It’s the difference between counting tokenization products and counting the infrastructure those products run on. The infrastructure number is an order of magnitude larger because infrastructure creates network effects that individual products can’t.

What’s actually being built

The reason I’m writing this now is that the infrastructure layer is forming fast, and I don’t think most bank executives appreciate how much has moved in the last twelve months.

Start with the pipes. DTCC, the backbone of US securities settlement, announced in December 2025 that it will tokenize DTC custodied US Treasury securities on the Canton Network using its ComposerX platform. An MVP is targeted for the first half of 2026, with plans to expand to a broader range of DTC-eligible assets based on client demand. This isn’t a pilot. This is the entity that settles virtually every US equity and fixed-income trade building tokenization into its core infrastructure.

SWIFT, which connects over 11,000 institutions in more than 200 countries, completed a multi-bank tokenized bond settlement trial in January 2026 with BNP Paribas, Intesa Sanpaolo, and SG Forge. It wasn’t a proof of concept. It was the first time SWIFT orchestrated tokenized asset transactions as a single coordinated process using both blockchain and traditional systems. SWIFT is now adding a blockchain based ledger to its infrastructure, designed in collaboration with over 30 banks, initially focused on real-time, 24/7 cross-border payments.

The exchanges are moving too. On March 18, 2026, the SEC approved Nasdaq’s framework for trading tokenized stocks and ETFs on blockchain rails alongside traditional shares. Russell 1000 stocks and major ETFs can now trade and settle as blockchain-based tokens, with the same tickers, prices, and investor rights. Nasdaq tapped Kraken to distribute stock tokens internationally. Six days later, NYSE announced a partnership with Securitize to build a 24/7 digital trading platform for tokenized equities, ETFs, and fixed income, with a pilot targeted for Q3 2026.

Goldman Sachs is spinning out its tokenization platform, GS DAP, as an independent company by mid 2026. The reasoning is telling: having the platform on Goldman’s balance sheet made it hard to get broad institutional adoption. Other banks didn’t want to run their infrastructure on a competitor’s platform. Making it independent and industry-owned removes that barrier. Tradeweb became the first strategic partner, integrating its trading and liquidity capabilities across fixed income. GS DAP runs on the Canton Network, which now supports over $6 trillion in on-chain assets across 600 institutions.

BNY, the world’s largest custodian with nearly $58 trillion in assets under custody, launched tokenized deposits in early 2026 for collateral and margin workflows. But the bigger story is how Carolyn Weinberg described their approach: mapping every post-trade step end-to-end and asking what can be reimagined. Not “which product should we tokenize?” but “how does the entire post-trade process work differently on programmable rails?”

That’s infrastructure thinking. And it’s happening at the institutions that move markets.

The network economics

Here’s why I think the product vs infrastructure distinction matters so much economically.

Products compete on features. A tokenized bond competes with other bonds on yield, credit quality, and liquidity. If your tokenized bond is slightly better than the next one, you get a slightly bigger market share. The economics are linear.

Infrastructure creates network effects. A shared settlement layer becomes more valuable as more participants join. A common tokenization standard becomes more useful as more assets conform to it. A coordinated compliance framework becomes more efficient as more institutions adopt it. The economics are exponential. That’s a fundamentally different business case, and it requires a fundamentally different investment thesis.

Look at what’s forming. The Canton Network connects 600 institutions with built in privacy controls and cross-ledger interoperability. The Cari Network (KeyBank, Huntington, First Horizon, M&T, Old National) is building tokenized deposit infrastructure on ZKsync anchored to Ethereum. The IBAT consortium is creating a shared network for community banks in Texas. Custodia and Vantage’s tokenized deposit infrastructure is being adopted by 600 banks through the Participate network. These aren’t really product launches. They’re infrastructure buildouts where the value comes from the network, not any single node.

The analogy I find myself coming back to is Visa. In 1958, Bank of America launched BankAmericard as a product, a single bank’s credit card mailed to 65,000 people in Fresno. It was a product for eight years. Then in 1966, BofA started licensing it to other banks. By 1970, the issuing banks took over entirely, forming a member owned consortium that Bank of America no longer controlled. It was rebranded as Visa in 1976. The product became infrastructure, and the infrastructure became the most valuable payments network on earth. No single bank could have built that alone. But once the shared rails existed, every bank that plugged in could offer its own products on top: credit cards, debit cards, rewards, corporate cards. The products differentiated. The infrastructure was shared.

Goldman spinning out GS DAP follows the same logic. A single bank’s tokenization platform, made independent and industry owned so it can become shared infrastructure. The Cari Network, the IBAT consortium, all of them are similar pattern of banks recognizing that the value is in the network, not any single node.

The banks still asking which product to tokenize are thinking about the card. The ones building shared infrastructure are thinking about the network.

The interoperability imperative

This is where I think the infrastructure argument gets most urgent, because the biggest risk in the current buildout is fragmentation.

Right now, tokenized assets live on different blockchains with different standards, different compliance frameworks, and different settlement mechanisms. A tokenized Treasury on Canton can’t easily interact with a tokenized deposit on Ethereum, which can’t easily settle against a stablecoin on Solana. That fragmentation is fine for pilots and proofs of concept. It’s a disaster for infrastructure.

SWIFT seems to understand this. Its interoperability trials weren’t about building a single blockchain. They were about connecting different blockchains through a common coordination layer, so that a bank using one network can transact with a bank using another. The January 2026 trial demonstrated exactly this: seamless exchange and settlement of tokenized bonds across blockchain platforms and traditional systems.

Canton’s architecture works the same way. It’s designed as a “network of networks” where institutions operate independent but interoperable ledgers. Each institution keeps its own data private. The Global Synchronizer enables atomic transactions across applications without sacrificing confidentiality. That’s why DTCC chose it for Treasury tokenization: it preserves the privacy and control that regulated institutions require while enabling the composability that makes programmable settlement useful.

The lesson here is that infrastructure without interoperability is just a more expensive silo. Banks that build tokenization capability in isolation, on proprietary systems that don’t connect to the broader ecosystem, will find themselves with a product, not a platform. And in a networked world, products that don’t connect become dead ends.

Treasury as the proving ground

I’ve written before about how programmable settlement changes the economic character of deposits. But treasury is where infrastructure thinking meets real money in the most immediate way.

Think about what corporate treasury looks like today. Cash sits in bank accounts earning whatever the bank offers, or in money market funds that settle T+1 or T+2. Collateral is managed through manual processes with end-of-day reconciliation. Intraday liquidity is expensive and hard to optimize because the systems that manage it are slow. FX settlement still carries Herstatt risk for cross-timezone trades. Repo markets close on weekends.

Now think about what treasury looks like on programmable infrastructure. Cash is a token that can be moved instantly, 24/7, to wherever it generates the highest risk-adjusted return. Collateral management is automated through smart contracts that rebalance positions in real time based on predefined rules. Intraday liquidity is optimized continuously because the infrastructure never stops. FX settlement is atomic, eliminating counterparty risk. Repo can happen at 2am on a Sunday.

Someone at Alpha Point made this case directly at the recent American Banker On-Chain event

“This is not about incremental efficiency. This is a substantial change on the balance sheet.”

They’re right. This isn’t 5% cost savings on post trade processing. This is a structural change in how treasury generates and deploys capital.

The tokenized Treasury market is now over $11 billion, up from $3.9 billion at the start of 2025. Circle’s USYC has overtaken BlackRock’s BUIDL as the largest tokenized Treasury product at $2.2 billion. Goldman announced 24/7 tokenized Treasury bond trading. DTCC is tokenizing DTC custodied Treasuries. The infrastructure for programmable treasury isn’t theoretical. It’s being built, and the banks that connect to it first will have a structural advantage in how they manage their own balance sheets and serve their institutional clients.

What this means for bank boards

I want to be specific about what infrastructure thinking actually changes at the decision making level, because this is where I see the biggest disconnect.

When a bank treats tokenization as a product, the budget sits with a business line. It’s measured on product P&L. It competes for funding against other product initiatives. The team is small, often in an innovation lab, and the rest of the bank doesn’t need to change how it operates. The board hears an update once a quarter and nods politely.

When a bank treats tokenization as infrastructure, the investment is actually enterprise wide. It touches technology, operations, compliance, treasury, custody, and client servicing. It requires organizational change with either a dedicated unit like JPMorgan’s Kinexys or U.S. Bank’s Digital Assets and Money Movement group, or a consortium model like Cari Network, or a strategic partnership with an infrastructure provider like Stablecore. The board isn’t hearing an update. The board is making a multi-year capital allocation decision about the bank’s operating model.

That’s a harder conversation. It requires more conviction, more coordination, and more willingness to invest before the returns are fully visible. But it’s the right conversation, because the infrastructure being built right now will determine which banks are at the center of the financial system in 2030 and which are at the periphery.

Global banking IT spending is projected to exceed $760 billion in 2025, rising at 9% annually. Seven in ten banks plan to increase infrastructure spending. I don’t doubt that banks are willing to invest in technology. I think the challenge is directing that investment in the right layer. Another core banking modernization that preserves the existing architecture is a product investment. Connecting to the programmable settlement infrastructure that DTCC, SWIFT, the exchanges, and the major custodians are building is an infrastructure investment. One maintains the status quo. The other positions the bank for what’s coming.

The banks building pipes

I’ve been writing about programmable money for a while now, and the thing that strikes me most about where we are in early 2026 is how fast the conversation has shifted from “should we?” to “how do we?” The regulatory environment is favorable. The technology works. The business case is clear.

But the execution models that are succeeding aren’t the ones chasing tokenization products. They’re the ones building, or connecting to, infrastructure. BNY mapping post trade end to end. Goldman making GS DAP industry neutral. DTCC putting Treasuries on Canton. SWIFT adding a blockchain ledger. Five regional banks forming Cari Network. The pattern is infrastructure first, products on top.

Every major technology transition in banking has followed this sequence. ATMs started as a product (cash dispensing) and became infrastructure (a shared network that changed how banks distributed services). Electronic trading started as a product (screen based execution) and became infrastructure (the backbone of modern capital markets). Internet banking started as a product (check your balance online) and became infrastructure (the platform for everything from payments to lending to wealth management). In every case, the banks that built or connected to the infrastructure early captured disproportionate value. The ones that treated the new technology as just another product offering lost ground to those that understood the shift.

Programmable money is following the same pattern. The product phase (tokenize a bond, run a pilot, issue a press release) is likely winding down. The infrastructure phase (rebuild the pipes, connect to shared networks, redesign operations) will start accelerating.

The question for every bank board is simple really: are you building products, or are you building pipes? Because in five years, the answer to that question will be obvious. And for some banks, it will probably be too late to change it.

References

Tokenization market size and projections

• McKinsey Estimates Tokenization Will Be Less Than $2 Trillion by 2030 — Ledger Insights

• Tokenized Funds: The Third Revolution in Asset Management Decoded — BCG

• Circle Overtakes BlackRock in Tokenized Treasuries as Market Hits Record $11 Billion — CoinDesk

• Tokenized U.S. Treasuries Hit $7.3B in 2025 — Yellow

DTCC and Canton Network

• DTCC and Digital Asset Partner to Tokenize DTC-Custodied U.S. Treasury Securities on the Canton Network — Canton Network

• DTCC, Canton, and the Next Phase of Tokenized Market Infrastructure — TRM Labs

• Wall Street Heavyweights Back Builder of Canton, a Network That Supports $6T On-Chain Assets — CoinDesk

• Digital Asset and Industry Working Group Complete Groundbreaking On-Chain US Treasury Financing on Canton Network — Tradeweb

SWIFT tokenization and interoperability

• SWIFT Completes Multi-Bank Tokenized Bond Settlement Trial — CCN

• Swift Takes Bold Steps to Unlock the Benefits of Digital Finance on a Global Scale — SWIFT

• Swift Completes Tokenized Asset Trial With BNP Paribas — PYMNTS

Exchange infrastructure

• SEC Approves Nasdaq’s Move to Allow Tokenized Securities Trading — CoinDesk

• Nasdaq Partners With Kraken to Distribute Tokenized Stocks Globally — CoinDesk

• NYSE Taps Securitize to Build Its 24/7 Tokenized Stock Trading Platform — Unchained

Goldman Sachs GS DAP

• Goldman Sachs Digital Assets to Spin-Out Technology Platform GS DAP — Goldman Sachs

• Goldman Sachs Focuses on Spinning Out Tokenization Platform — Markets Media

• Goldman Sachs Announces 24/7 Tokenized U.S. Treasury Bond Trading — AInvest

BNY digital assets

• BNY Launches Tokenized Deposits in Digital Assets Expansion — Bloomberg

• BNY Expands Digital Asset Platform with Launch of Innovative On-Chain Offering — BNY

• Financial System Modernization Trends and Insights 2026 — BNY

Bank infrastructure consortiums

• U.S. Regional Banks Building Tokenized Deposit Network on ZKsync (Cari Network) — CoinDesk

• Custodia’s Tokenized Deposit to Be Used in 600-Bank Network — American Banker

• IBAT Leads Push for Stablecoins and Tokenized Deposits — IBAT

Banking IT spending

• 70% of Banks Report Technology Infrastructure Spend to Increase in 2025 — Tech Channels

• Tech in Banking 2025: Transformation Starts with Smarter Tech Investment — BCG

• The State of Banking Technology in 2026: Why This Year Is Different — CCG Catalyst