JPMorgan, Citi, BofA & Wells Fargo Go Onchain Before Stablecoins Take Their Deposits

Key Takeaways

• JPMorgan, Citi, BofA, and Wells Fargo are building a tokenized deposit network via The Clearing House, targeting H1 2027, with 24/7 instant settlement
• The network is a direct response to the CLARITY Act, which could let stablecoin issuers offer yield competing directly with bank deposit rates
• JPMorgan warned the CLARITY Act window is narrowing before midterms, while simultaneously building the blockchain infrastructure to benefit if it passes

The push to bring traditional banking onto blockchain infrastructure is picking up pace. While Congress continues debating rules for digital assets and stablecoins, some of the largest US banks are moving ahead with plans of their own. JPMorgan, Citi, Bank of America, and Wells Fargo are among the institutions working on a shared network for tokenized deposits. This project is expected to launch in 2027. The timing is notable, coming as stablecoin adoption accelerates and the CLARITY Act remains under discussion in Washington.

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Why the CLARITY Act Pushed America’s Biggest Banks to Build Their Own Blockchain

According to reports, the banks are developing the network through The Clearing House, a payments company jointly owned by major US financial institutions. The platform would allow member banks to move tokenized customer deposits across blockchain infrastructure with instant settlement and 24/7 availability.

The announcement arrived just one day after Stripe, Visa, and Mastercard unveiled a joint stablecoin initiative aimed at expanding blockchain-based payments.

David Watson, chief executive of The Clearing House, said the banking industry faces a “radically different” future around on-chain payments and finance. Large multinational companies are expected to be among the first users. It should be noted that potential applications range from treasury management to cross-border payments and liquidity operations.

Unlike stablecoins, tokenized deposits remain within the banking system. They represent traditional customer deposits recorded on blockchain rails while maintaining the same regulatory and accounting treatment as ordinary bank balances.

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Why Banks Are Betting on Tokenized Deposits

Part of the backdrop is the ongoing debate around the crypto legislation, the CLARITY Act. JPMorgan said this week that the bill’s path through Congress remains uncertain. Disagreements over stablecoin yield provisions are emerging as one of the key sticking points. Nikolaos Panigirtzoglou said,

“With the US midterms approaching, the legislative window for passage of the Market Structure Bill has narrowed, which could postpone progress on crypto market-structure reform this year,”

The bank noted that restrictions on passive yield for stablecoins could encourage capital to flow toward alternatives such as tokenized money-market funds, tokenized Treasuries, and tokenized deposits.

Several participating banks already have experience in the space. JPMorgan operates its Kinexys payment platform and recently expanded a deposit-token initiative onto Coinbase’s Base network, strengthening the growing Coinbase-JPMorgan relationship. Citi has launched Citi Token Services for institutional clients, while other banks have been exploring similar tokenization projects.

The latest initiative suggests large banks are no longer treating blockchain-based payments as an experiment. Demand for these products may still be developing. Bank of America executive Mark Monaco recently acknowledged that clients are not exactly “beating down the door” for tokenized deposits. Even so, major lenders appear keen to build the infrastructure before demand arrives.

As stablecoin issuers, payment companies, and lawmakers all shape the future of digital finance, banks are positioning themselves to remain part of that conversation rather than watching it unfold from the sidelines.

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