Tokenized Deposits Are Ready. The Infrastructure Decision Is What Matters.

JPMorgan's Kinexys platform processes more than $2 billion daily in blockchain-based payments. The BIS 2025 Annual Economic Report identified tokenized commercial bank deposits as foundational to the next-generation monetary system, and more than a dozen major banks globally now have programs in production or active pilots. Today, banks can tokenize deposits. The harder question for an institutional decision-maker is what infrastructure platform to build them on, and whether the infrastructure choice provides a high level of cybersecurity and access control, along with interoperability for tokenized assets.

The regulatory path has cleared in the U.S.

Two years ago, many US-based banks could not explore tokenized deposits without triggering supervisory concern. The FDIC's post-FTX guidance effectively froze digital asset activity at insured institutions, and the OCC had not clarified whether deposit tokenization was a permissible banking activity.

That changed in 2025. The FDIC withdrew its restrictive guidance and began developing specific supervisory frameworks for tokenized deposits. The OCC confirmed that crypto-related activities, including tokenization of bank liabilities, are permissible for national banks. Congress passed the GENIUS Act, establishing a federal regulatory framework for payment stablecoins and, in the process, drawing a clear legal boundary between stablecoins and tokenized deposits.

State regulators are now fielding growing inquiries from chartered banks exploring deposit tokenization, primarily through consortium models. The Conference of State Bank Supervisors has called for unified federal-state guidance on KYC/AML obligations, smart contract enforceability, and liquidity risk management in the context of always-on, 24/7 redemption.

The regulatory environment has not fully resolved, but it has shifted from prohibition to active rulemaking. Most institutions now accept that tokenized deposits are permissible. The open question is what infrastructure provides the most control and resiliency for institutions.

The infrastructure landscape is fragmenting

The answer to that infrastructure question is being shaped by dozens of parallel initiatives led by different banks, each building on different platforms with different governance models and poor interoperability.

Five regional banks, including KeyBank, Huntington, First Horizon, M&T Bank, and Old National, formed the Cari Network, a consortium building tokenized deposit infrastructure on a permissioned Ethereum Layer 2. The group plans a pilot in Q3 2026 with full commercial rollout by year-end, initially supporting money movement only among consortium members.

JPMorgan's Kinexys platform has been in production since 2019. Its tokenized deposit product, JPMD, represents U.S. dollar deposits held at JPMorgan and runs on Coinbase's Base network. Citi's tokenized cash service moved from pilot to live production in late 2024, processing large transactions for institutional clients.

HSBC plans to launch its tokenized deposit service for corporate users in the U.S. and UAE in the first half of 2026. In the UK, a regulated liability network pilot involving Barclays, Lloyds, NatWest, HSBC, Nationwide, and Santander is running real consumer-facing transactions through mid-2026.

The Citi Institute projects that tokenized bank deposits could support $100 to $140 trillion in annual flows by 2030. Currently, these initiatives are building on incompatible platforms with minimal shared connectivity or interoperability between them.

Three models, three sets of trade-offs

Institutions evaluating tokenized deposit infrastructure generally face three architectural paths, each with different implications for the amount of control they retain.

Consortium ledgers distribute cost and regulatory risk across member institutions. The Cari Network and the UK RLN follow this pattern: multiple banks share a common ledger with jointly governed rules. The appeal is straightforward, particularly for regional banks. Shared infrastructure reduces the per-institution investment, and regulators have been more receptive to multi-bank proposals than single-institution experiments.

The constraint is governance. Every change to consortium governance and decision-making rules requires consensus across consortium members, often requiring real-world coordination. Innovation timelines are bounded by the slowest-moving member, and adding new capabilities to the digital ledger requires multi-party agreement and coordinated testing. Shared infrastructure also entails a shared attack surface, in which security patching and incident response require coordination among all participants. Initial connectivity is typically limited to consortium participants, meaning the network's utility is constrained by its membership until external integrations are negotiated and built.

Vendor-managed platforms offer a fast path to production. JPMorgan's Kinexys and services from infrastructure providers like Fireblocks handle the complexity of running distributed ledger infrastructure. Institutions can issue tokenized deposits without building or operating the underlying technology.

Vendor-managed platforms offer a combination of managed services, and the benefits to the bank’s business depend on the choice of vendor. For example, settlement logic and interoperability are determined by the platform operator. Compliance enforcement, including KYC/AML and jurisdictional controls, follows the vendor's implementation, which the institution must evaluate against its own regulatory obligations as rules evolve. The outcome of using a vendor-managed platform is that the institution issuing the deposit is a tenant on someone else's infrastructure. Switching costs increase as transaction volume grows and integrations deepen, a pattern familiar to anyone who has evaluated core banking system migrations.

Purpose-built infrastructure delivers the greatest degree of control and flexibility. The institution or consortium designs, deploys, and operates its own settlement environment to meet its business requirements.

What it preserves is autonomy. The institution has end-to-end control over its tokenized asset issuance and settlement, allowing it to future-proof its business capabilities to capture future demand. Purpose-built infrastructure can interoperate directly with the existing banking ledger without requiring any changes to it, extending the value of existing infrastructure investments. Finally, it disintermediates the bank from reliance on external vendors or networks that determine settlement time and cost for greater margin control and more topline growth.

The governance model for tokenization that an institution chooses now will shape what's possible for years to come. Smaller banks exploring the space may reasonably start with a consortium or vendor platform. For institutions ready to invest in long-term control and interoperability, the Cosmos SDK provides the foundation for purpose-built infrastructure with the flexibility to capture business value at any scale.

The connectivity problem

Regardless of which model an institution selects, one challenge affects all models: tokenization networks have limited interoperability, and some don't talk to each other at all.

A tokenized deposit on the Cari Network cannot actively settle against a JPMD token on Kinexys, and HSBC's deposit tokens won't interoperate with the UK RLN's infrastructure. Each initiative operates on a separate technology stack and set of standards. The BIS has discussed how there is no shared connectivity layer between them.

This matters because the value of tokenized deposits scales with the number of counterparties that can transact using them. A deposit token that only moves between five consortium banks or within a single vendor's platform solves an internal efficiency problem. It does not address the cross-institutional settlement frictions that make correspondent banking expensive in the first place.

The financial industry has encountered this pattern of fragmentation before. Early electronic payment networks operated in isolation until standardized messaging (SWIFT) and settlement infrastructure (CLS Bank) provided the connective tissue between them. Tokenized deposit networks are following the same path. The individual ledgers work fine. Moving value between them is the unsolved part.

For institutions making tokenization infrastructure decisions today, a relevant question is whether the chosen platform supports standardized connectivity to other deposit networks as they emerge, or whether each new counterparty relationship requires a bespoke integration.

How some institutions are addressing both problems

A number of institutions have taken a different approach, treating governance and connectivity as a single architectural decision.

Figure Technologies processes over $42 billion in home equity lending on the digital ledger-based financial infrastructure it owns and operates. This infrastructure has allowed them to enable 100+ basis points in operational savings by eliminating manual reconciliation with full control over settlement logic, throughput requirements, and compliance enforcement directly in the ledger. Figure concluded that the governance constraints of shared platforms and the control limitations of vendor infrastructure couldn't support the settlement requirements of its lending operations.

In Japan, Progmat and Datachain, backed by a consortium of over 200 financial institutions including MUFG, Mizuho, and SBI, provide a regulated tokenized asset and stablecoin infrastructure. Payment instructions flow through existing banking systems via SWIFT's API, preserving familiar KYC/AML controls. Settlement happens on purpose-built chains. Cross-chain transfers occur via a standardized connectivity protocol that enables regulated assets to move between networks while maintaining compliance with issuance requirements. This enabled Progmat and Datachain to cut intermediary fees and FX spreads while enabling 24/7 cross-border payments.

Stable operates a dedicated stablecoin ledger designed from the ground up around USDT as the native settlement currency. The Cosmos SDK allowed Stable to customize consensus, fee logic, and compliance behavior specifically for stablecoin payments rather than inheriting the constraints of a general-purpose platform. IBC provides standardized connectivity to liquidity across other networks and fiat on/off-ramp infrastructure, treating the ledger itself as the payment rail rather than layering stablecoins on top of existing systems.

These tokenization frameworks share a common factor: each institution controls its own infrastructure while connecting to other networks through a standardized protocol. The architecture is modular, allowing institutional engineering teams to plug-and-play to meet their operational environment needs. The performance of these Cosmos-based tokenization platforms meets the requirements of consumer experiences, with instant transaction settlement, 10,000+ transactions per second, and transaction costs measured in fractions of a cent.

What the infrastructure decision looks like from here

Many of the institutions referenced in this article made their infrastructure commitments within the last 24 months. Banks making similar decisions in 2026 are choosing the governance model and connectivity options they'll operate under over the next decade.

A few considerations are worth evaluating early. How much control does the institution need over cybersecurity and compliance enforcement? Will the chosen infrastructure interoperate with other deposit networks as they emerge, as well as the institution’s existing financial systems? What long-term benefits does the infrastructure offer to the business?

Token formats and regulatory frameworks are largely converging. The infrastructure underneath, the part that determines who controls the issuance and settlement of assets and which networks can transact with each other, is where meaningful differentiation still exists.

For institutions evaluating tokenized deposits on purpose-built infrastructure, the Cosmos solutions page outlines how others are approaching this decision today.