How US banks are quietly preparing for an onchain future.

Key receivers

US banks are prioritizing versions of familiar products, including deposits, cash and protection, rather than launching new crypto-native assets.

Much of the onchain banking activity is happening in bulk payments, settlements and infrastructure, largely out of public view.

Regulators are allowing crypto-related banking, but only under strict oversight and risk-managed frameworks.

Public blockchains like Ethereum are being tested by major banks, but only with regulated and compliant product structures.

US banks are not racing to issue speculative crypto products. Instead, they are strategically rebuilding core financial pipelines, including payments, deposits, escrow and fund management, so these services can run on distributed ledgers. The work is increasingly technical and often invisible to retail clients, but it is already reshaping how large institutions think about cash flow and settlement.

Instead of accepting unregulated crypto assets, banks are focusing on tokenization, the process of representing traditional financial claims such as deposits or fund shares that are registered as digital tokens. These tokens are designed to operate with embedded rules, automatic settlement, real-time reconciliation and reduced collateral risk while remaining within existing regulatory frameworks.

Tokenized cash: Deposits that operate as software

One of the clearest signs of this shift is the rise of tokens, sometimes described as “deposit tokens.” These are not stablecoins issued by non-banks. Instead, they are digital statements of commercial bank deposits issued and returned by regulated banks.

JPMorgan is among the first movers. Launched for institutional clients, the JPM coin system is positioned as a token that enables real-time 24/7 transfers on a blockchain-based rail. According to JPMorgan, the system is used for peer-to-peer payments and settlements between authorized customers.

In the year In 2024, JPMorgan rebranded its broader blockchain unit as Kinexys, not a standalone “crypto” initiative but a platform for payments, tokenized assets and programmable liquidity.

City has taken the same route. In September 2023, the bank announced Citi Token services, combining tokenized deposits and smart contracts with institutional money management and trade finance offerings. In the year By October 2024, Citi said its cash service had moved from pilot to live production, processing millions of dollars in transactions for institutional clients.

These initiatives are not being done in isolation. The New York Federation's New York Innovation Center (NYIC) has published a proof of concept Regulated Accountability Network (RLN) involving banks including BNY Mellon, Citi, HSBC, PNC, TD Bank, Truist, US Bank and Wells Fargo, as well as Mastercard.

The project simulates interbank payments with a theoretical mass central bank digital currency (CBCC) representation of commercial bank deposits, all in a controlled test environment.

Did you know this? Beyond money and funds, major US banks are actively considering tokenizing real-world asset classes such as personal loans and commercial real estate. This could open up onchain liquidity and fractional ownership, which could give traditional finance a major edge over traditional crypto-native models.

Protection and Protection: Building Institutional Level Controls

For any onchain system to work at scale, assets must be held and transferred with strong security and governance standards. American banks have been steadily building this layer.

BNY Mellon announced in October 2022 that its digital asset custody platform will be live in the US, allowing select institutional clients to hold and transfer Bitcoin (BTC) and Ether (ETH). The bank positions the service as an extension of its traditional custodial role geared toward digital assets.

Regulators have been clarifying what is allowed. In Interpretive Letter 1170, the Office of the Comptroller of the Currency (OCC) stated that national banks may offer cryptocurrency custody services to customers. The US Federal Reserve has published a 2025 paper outlining expectations around risk management for crypto-asset holdings by banking institutions.

At the same time, regulators emphasized caution. In January 2023, the Federal Reserve, the Federal Deposit Insurance Corporation, and the OCC issued a joint statement warning banks about risks associated with crypto-asset activities and crypto-sector companies.

Tokenized funds and security move to public blockchains

Beyond fees and regulation, banks are experimenting with impersonating traditional investment products.

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

Reportedly, JPMorgan seeded the fund with $100 million and described it as a representation of a traditional money market fund rather than a crypto-native product.

This move is significant because it shows how traditional asset managers can test public blockchains without abandoning established compliance models by linking tokenized cash and tokenized yield instruments within familiar regulatory structures.

Did you know this? Some US banks and market participants are exploring the role of tokenization in protecting traditional trading income by integrating digital asset trading and brokerage infrastructure directly into banking systems. This approach allows execution, expansion and post-trade services to remain in-house even as alternative markets grow.

Regulation: Allowed, but closely monitored

Alongside these pilots, the regulatory environment is growing. In the year In March 2025, the OCC announced that national banks could engage in crypto-related activities, including custody and some stablecoin and payment activities, and repealed earlier guidance that required banks to seek regulatory approval before proceeding.

The OCC also issued a series of interpretive letters addressing related issues, including banks supporting stablecoins (IL 1172) and using distributed ledger networks and stablecoins for payments (IL 1174), along with guidance on how regulators will evaluate such practices.

Taken together, these developments show that the banking sector is carefully preparing for the onchain future by adapting existing products, embedding them in monitored environments, and testing new infrastructure.