Banks are moving customer deposits onto blockchain networks, seeking stablecoin-like payment speed while keeping accounts inside regulated institutions. According to a Benzinga analysis, the strategy could position banks and crypto issuers as competitors, although neither model is certain to replace the other. For readers, the rivalry matters less as a winner-takes-all contest than as a question of who holds the customer relationship, and under which legal and regulatory framework a digital dollar balance sits.

The distinction begins with what each token represents. Tokenized deposits are money held at regulated banks, while conventional stablecoins generally represent claims on issuers backed by reserve assets. Both can run on blockchain technology, but they operate under different legal, regulatory, and financial arrangements.

Putting Deposits on Blockchain

The analysis cites Pablo Hernández de Cos, general manager of the Bank for International Settlements, the Basel-based institution that serves as a forum for the world's central banks, who at the Federal Reserve's annual Jackson Hole conference described tokenized bank deposits as more promising for traditional finance's digital-asset push than the prospect of stablecoins becoming widely accepted payment instruments.

His view frames the underlying business question: banks already hold customer deposits, and tokenization could let them add blockchain-based transfers without giving up those relationships. The article presents this as a possibility rather than a settled outcome, noting that banks must also weigh compliance, operating costs, and whether different networks work together smoothly.

JPMorgan's earlier initiatives illustrate the approach. In November 2025, the bank made JPM Coin, its dollar-denominated deposit token known as JPMD, available to institutional clients on Base, an Ethereum layer-2 network. Eligible institutional customers can transfer tokenized deposits around the clock. The source describes an existing service, not a new launch.

Citigroup has pursued a related path through Citi Token Services, which lets institutional customers move liquidity across participating markets using blockchain infrastructure. The source recounts a weekend cross-border payment that Citi and Singapore-based DBS Bank said they completed using tokenized deposits on the digital ledger of Swift, the global interbank messaging network, finishing the transaction in minutes. These examples concern institutional use, not broad consumer access.

Different Models for Digital Dollars

The analysis draws a contrast between bank deposits and stablecoins through their relationships to customers and networks. Banks may use deposit tokens for settlement through existing balance sheets and banking relationships. Stablecoins, by contrast, are designed to move across supported networks and connect with decentralized financial applications, according to Aurélien Roussel, chief executive and co-founder of Frgmnt.

That difference matters to developers who value open networks and links to lending, payments, and other onchain applications. Roussel argues that tokenized deposits may suit existing bank relationships and institutional settlement, while stablecoins hold an advantage in portability and composability. These are attributed views, not guarantees about which system will prevail.

Circle, the issuer of USDC, reported $73.3 billion in USDC circulating at quarter-end and $14.8 trillion in quarterly onchain transaction volume, up 151% from the same period a year earlier. Reserve income represented more than 95% of its second-quarter revenue, according to the source, a detail that shows how stablecoin issuers earn on the reserve assets backing their tokens, a revenue structure distinct from banks, which hold deposits on their own balance sheets. The figures describe Circle's reported results.

Industry voices see room for both models. Milton "Todd" Ault, founder of Ault Blockchain, argues banks can retain deposits while offering around-the-clock transfers and access to tokenized assets. John Cho, chief executive and co-founder of Ratio and chief stablecoin officer at the Kaia DLT Foundation, expects different issuers to serve different uses: banks may focus on institutional settlement, clearing, and treasury, while Circle and Tether, the issuer of USDT, continue serving exchanges, wallets, payments, and broader onchain ecosystems.

BlockTelegraph has separately covered a Swift blockchain ledger pilot related to institutional payment infrastructure, a report on Canton Network's financial institutions, and coverage of a banking conference on blockchain finance.

The source portrays banks, stablecoin issuers, and infrastructure providers as competing across different parts of a developing financial system. Its examples remain institutional services and reported payment tests, with interoperability, operating costs, and compliance identified as key considerations. The question of how the two models will divide future uses remains open, and the near-term signposts are concrete: whether deposit tokens extend beyond institutional clients, whether bank-run and public networks interoperate more smoothly, and how compliance requirements and operating costs shape which services gain traction.