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US Banks embrace Blockchain: Tokenization as the Path to On-Chain Finance
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A wave of innovation is sweeping through the US banking sector as institutions explore integrating traditional financial infrastructure with blockchain technology, prioritizing a regulated approach over the creation of self-reliant cryptocurrencies.
Leading American banks are actively redesigning their core operations – encompassing payments, deposits, custody, and fund management – to leverage the benefits of a blockchain-based financial model. The central strategy driving this shift is tokenization, the process of converting traditional assets like deposits or fund shares into regulated digital representations. These tokens promise automated settlements, immediate reconciliation, and reduced counterparty risk, all while operating within existing legal frameworks.
The Rise of Deposit Tokens and Institutional Pioneers
Unlike privately issued stablecoins, these new deposit tokens are backed by regulated banks and directly represent real deposits.JPMorgan emerged as an early leader with JPM Coin, facilitating 24/7 transfers between institutional clients. Building on this foundation, the bank relaunched its blockchain unit as Kinexys in 2024, focusing on payments and tokenized assets. citi followed suit with Citi Token Services, already processing multi-million dollar transactions.
The secure storage of digital assets is also progressing rapidly. In 2022, BNY Mellon unveiled a platform designed to safeguard bitcoin and Ether. Together, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve (SEC) established guidelines for banks offering these services, while also cautioning against the inherent risks of the broader crypto market.
JPMorgan’s MONY and the New York Fed’s Experimentation
The momentum continued into December 2025, when JPMorgan Asset management launched MONY, its first tokenized money market fund on the Ethereum blockchain, backed by an initial investment of US$100 million.This product effectively replicates a traditional money market fund in a digital format, demonstrating how institutions are testing public blockchains without abandoning regulatory compliance.
The New York Federal Reserve is also actively involved,experimenting with the Regulated liability Network (RLN).This network simulates interbank payments using tokenized deposits and a version of a Wholesale CBDC (Central Bank Digital Currency), with participation from major financial players including:
- BNY Mellon
- Citi
- HSBC
- PNC
- TD Bank
- Truist
- U.S. Bank
- Wells Fargo
- Mastercard
Expanding Horizons: Real-World Assets and Regulatory Shifts
Beyond deposits, banks and asset managers are exploring the tokenization of real-world assets such as private credit and real estate. This could unlock new levels of liquidity and enable fractional ownership, perhaps revolutionizing these markets.
Supporting this evolution, the OCC has relaxed regulations to encourage participation in stablecoin and digital payment activities, albeit under strict supervisory oversight.
According to a recent report, the US banking sector is steadily moving towards an on-chain model, progressing incrementally and consistently within established regulatory boundaries. This strategic approach signals a
