Tokenized Bank Deposits Advance as Clarity Act Waits

U.S. banks are accelerating plans for tokenized deposits and onchain settlement even as the Senate delays the Clarity Act until September, leaving key digital asset market rules unresolved.

Major financial institutions are already moving commercial bank money onto blockchain-based infrastructure. JPMorgan has processed more than $3 trillion in cumulative transactions through its Kinexys platform and offers JPMD, a deposit token aimed at institutional clients. Citi operates Token Services for cross-border treasury transactions across four markets.

In June, 17 major financial institutions, including JPMorgan, Bank of America, Citi and Wells Fargo, announced an initiative through The Clearing House to clear and settle tokenized deposits onchain, reportedly targeting 2027.

Regional banks are also entering the market. Huntington, First Horizon, M&T Bank, KeyCorp and Old National became design partners in March for the Cari Network, a bank-governed tokenized deposit system. More than 30 institutions have since joined, while another 40 are reportedly in discussions. Participating and prospective institutions represent more than $10 trillion in combined assets.

The growing adoption creates a critical challenge: interoperability. Tokenized deposits remain liabilities of individual banks, meaning a digital dollar issued by JPMorgan is fundamentally different from one issued by another institution.

Connecting these systems therefore requires more than blockchain bridges or common messaging standards. Interbank transfers still depend on clearing, where one bank's deposit is redeemed, another bank issues its own liability, obligations are netted, and remaining balances ultimately settle in central bank money.

Modern blockchain infrastructure must also deliver privacy, neutrality and independent verification. Banks need to protect transaction and customer information while avoiding dependence on infrastructure controlled by competitors.

The Clarity Act itself would not regulate tokenized deposits or automatically make bank networks interoperable. However, clearer digital asset regulation could encourage institutions to connect their networks by defining the broader regulatory environment alongside stablecoins.

Without regulatory certainty, banks have an incentive to maintain isolated, permissioned systems because they carry fewer compliance risks. The technology needed to connect private bank networks already exists, but regulatory clarity could determine whether institutions actually use it.

As Congress revisits the Clarity Act in September, the stakes extend beyond crypto market regulation. The decisions made in Washington could influence whether tokenized banking develops into interconnected financial infrastructure or another collection of digital walled gardens.