Key conclusions

• US banks are prioritizing tokenized versions of familiar products, including deposits, funds and custodial services, rather than introducing fresh crypto assets.

• Most of the onchain banks’ activity takes place in the areas of wholesale payments, settlements and infrastructure, largely out of the public eye.

• Regulators are increasingly allowing cryptocurrency-related banking activities, but only within a strictly supervised and risk-managed framework.

• Public blockchains like Ethereum are being tested by major banks, but only through controlled and compliant product structures.

US banks are not in a race to issue speculative crypto products. Instead, they are methodically rebuilding the core financial infrastructure, including payments, deposits, custody, and fund administration, so that these services can run on distributed ledgers. The work is incremental, technical and often undetectable to retail customers, but it is already changing the way huge institutions think about cash flow and settlements.

Instead of using unregulated crypto assets, banks are focusing on tokenization, the process of presenting customary financial claims such as deposits or fund shares in the form of digital tokens recorded on a ledger. These tokens are designed to be portable with built-in rules, automatic settlement, real-time reconciliation and reduced counterparty risk, while maintaining existing regulatory frameworks.

Tokenized cash: deposits that move like software

One of the clearest signals of this change is the rise of tokenized deposits, sometimes referred to as “deposit tokens.” These are not stablecoins issued by non-bank institutions. Instead, they are digital representations of commercial bank deposits issued and redeemed by regulated banks.

JPMorgan was one of the early movers. Its JPM Coin system, launched for institutional clients, is positioned as a deposit token that enables real-time transfers, 24/7, on blockchain-based rails. According to for JPMorgan, the system is used for peer-to-peer payments and settlements between approved customers.

In 2024, JPMorgan renamed its broader blockchain unit Kinexys, presenting it as a platform for payments, tokenized assets and programmable liquidity rather than a standalone “crypto” initiative.

Citi followed a similar path. In September 2023, the bank announced Citi Token Services, integrating tokenized deposits and clever contracts with institutional cash management and trade finance offerings. By October 2024, Citi said its tokenized cash service had already done this moved from piloting to live production, supporting multi-million dollar transactions for institutional clients.

These initiatives do not emerge in isolation. The Recent York Fed’s Recent York Innovation Center (NYIC). published details on the proof of concept for a regulated liability network (RLN) with banks including BNY Mellon, Citi, HSBC, PNC, TD Bank, Truist, US Bank and Wells Fargo, as well as Mastercard.

The project simulated interbank payments using tokenized commercial bank deposits along with a theoretical representation of a wholesale central bank digital currency (CBDC), all in a controlled test environment.

Did you know? In addition to cash and funds, major U.S. banks are actively considering tokenizing real asset classes such as private lending and commercial real estate. This could unlock onchain liquidity and fractional ownership, an area where customary finance may gain an advantage over typical crypto-native models.

Custody and preservation: building control at the institutional level

For any onchain system to function at scale, assets must be stored and transferred according to hearty custody and management standards. US banks are systematically building this layer.

BNY Mellon announced in October 2022, the Digital Asset Custody platform launched in the US, enabling select institutional clients to store and transfer Bitcoin (BTC) and Ether (ETH). The bank positioned the service as an extension of its customary depository role, adapted to digital assets.

Regulators are clarifying what is allowed. Office of the Comptroller of the Currency (OCC) in Interpretive Letter 1170, he stated so that domestic banks can provide cryptocurrency custody services to customers. The US Federal Reserve also weighed in, publishing its 2025 forecast paper on the custody of cryptocurrencies by banking organizations, which sets out expectations regarding risk management, internal control and operational resilience.

At the same time, regulators stressed caution. In January 2023, the Federal Reserve, the Federal Deposit Insurance Corporation and the OCC issued a joint statement statement warning banks about the risks associated with cryptocurrency activities and relationships with cryptocurrency companies.

Tokenized funds and collateral are moving to public blockchains

In addition to payments and custody, banks are also experimenting with tokenization of customary investment products.

In December 2025, JP Morgan Asset Management announced launch of My OnChain Net Yield Fund (MONY), the first tokenized money market fund. The company said the fund’s shares are issued as tokens on the public Ethereum blockchain and the product is powered by Kinexys Digital Assets.

JPMorgan reportedly contributed $100 million to the fund and described it as a private, tokenized representation of a customary money market fund rather than a cryptocurrency income product.

This step is significant because it brings tokenized cash and tokenized yield instruments together within familiar regulatory structures, illustrating how customary asset managers are testing public blockchains without abandoning established compliance models.

Did you know? Some U.S. banks and market participants are exploring the role of tokenization in preserving customary trading revenues by integrating digital asset trading and brokerage infrastructure directly into banking systems. This approach allows them to keep order execution, spreads and post-trade services in-house, even as tokenized markets develop.

Regulations: Permitted but strictly supervised

The regulatory environment has evolved alongside these pilot projects. In March 2025, the OCC clarified that national banks could engage in certain cryptocurrency-related activities, including custody and certain stablecoin and payment functions, and rescinded previous guidance that required banks to obtain a no-objection from regulators before proceeding.

The OCC has also issued a number of clarification letters on related issues, including banks holding stablecoin margins (IL 1172) and using distributed ledger and stablecoin networks for payments (IL 1174), with audit guidance explaining how regulators will review such activities.

Taken together, these developments show that the banking sector is carefully preparing for the future of onchain by adapting existing products, embedding them in curated environments, and testing fresh infrastructure well before it reaches the mainstream.