At its simplest, tokenization converts an existing claim into a digital representation on a distributed ledger. The underlying asset does not change, but the infrastructure that tracks ownership and settlement does.
In banking, that distinction is critical. Tokenized deposits do not create new money. They represent traditional bank deposits, issued and redeemed by regulated institutions but designed to operate on modern, programmable rails rather than legacy batch systems.
Why Tokenized Deposits Matter to Banks
Tokenized deposits sit on a bank’s balance sheet as deposit liabilities, just like conventional deposits. What changes is how those deposits move.
Distributed ledger infrastructure allows for near-instant settlement, continuous operation and programmable features such as conditional transfers or atomic settlement.
Tokenized deposits are backed one-for-one by funds held at insured depository institutions and governed by existing capital, liquidity and compliance requirements. That structure differentiates them from privately issued digital tokens that rely on reserve attestations or external custodians.
Those capabilities are particularly relevant for treasury operations, cross-border payments and intraday liquidity management. Instead of routing transactions through multiple intermediaries and cut-off windows, tokenized deposits can move directly between counterparties on a shared ledger.
Regulators Signal a Shift Toward Enablement
Regulation has long been a factor in bank adoption of blockchain-based infrastructure. That stance is now evolving.
In testimony before the House Financial Services Committee this month, Travis Hill, acting chairman of the Federal Deposit Insurance Corp., said the agency is taking a more open-minded approach to digital asset activity.
“We are … currently developing guidance to provide additional clarity with respect to the regulatory status of tokenized deposits,” Hill said in his remarks to lawmakers.
Hill also pointed to recommendations from the President’s Working Group on Digital Asset Markets, which called for clarifying permissible bank activities related to the tokenization of assets and liabilities. Tokenized deposits fall squarely within that scope.
State Supervisors Press for Consistent Guidance
State regulators are reinforcing the push for clarity. In a November comment letter, the Conference of State Bank Supervisors urged federal agencies to issue coordinated supervisory guidance on tokenized deposits before banks commit significant capital and operational resources. The letter outlined the need for guidance across recordkeeping, reconciliation, liquidity risk management, cybersecurity, anti-money laundering compliance and disclosures.
The message from state supervisors was that banks can innovate, but they need clear, consistent rules across jurisdictions.
FDIC Support Lowers Barriers to Adoption
By signaling that insured depository institutions may pursue tokenized deposit models within existing legal and supervisory frameworks, the FDIC reduces uncertainty around deposit insurance treatment, examination standards and compliance expectations. That clarity is often the deciding factor for banks evaluating whether to move beyond limited pilots.
It also draws a clear line between tokenized deposits and other digital liabilities, such as stablecoins, which operate under separate regulatory regimes.
Banks and Infrastructure Providers Are Already Testing
Banks and payment infrastructure providers are not waiting for final guidance to explore practical use cases.
FIS has positioned tokenized deposits as part of the next phase of money movement infrastructure, alongside real-time payments and programmable finance, with a focus on institutional and treasury use cases.
VersaBank has launched testing of a U.S.-dollar tokenized deposit product designed to combine blockchain settlement with insured bank money.
HSBC has introduced tokenized deposit capabilities for cross-border corporate payments, targeting faster settlement and improved liquidity efficiency.
JPMorgan has continued to expand its deposit token initiatives as part of a broader blockchain strategy focused on institutional settlement and interoperability.
Ant International has collaborated with banking partners to apply tokenized deposits to cross-border payment flows, reflecting demand from global commerce platforms.
What to Watch
Regulatory execution is the near-term inflection point. The FDIC has signaled that guidance on tokenized deposits is coming, and banks will be watching closely. Even incremental guidance could accelerate broader deployment. Interoperability will determine scale.
Wider adoption will depend on whether deposits can move seamlessly across bank networks, payment rails and jurisdictions without fragmenting liquidity or increasing operational risk.
