US Banks Build Tokenised Deposits as Stablecoin Yield Debate Tests the GENIUS Act

America’s largest banks are quietly building a new kind of money infrastructure, and the timing is no accident. As regulators finalise the rules for payment stablecoins and lawmakers argue over whether stablecoin holders should be allowed to earn yield, banks are developing tokenised deposits — digital representations of ordinary commercial bank deposits that move on blockchain rails. The distinction may sound technical, but it carries enormous commercial consequences. Tokenised deposits US banks are exploring sit inside the traditional banking system, which means they fall outside the yield prohibition that applies to payment stablecoins, while still offering the speed and programmability that have made stablecoins so popular. For banks, that combination could be the best of both worlds.

The story begins with regulation. The Office of the Comptroller of the Currency has finalised rules implementing the GENIUS Act, published on October 21, 2026, and taking effect on January 18, 2027. Those rules cover reserve assets, redemption, risk management, custody, and oversight for payment stablecoin issuers under OCC supervision. In other words, they set out how a company that issues a dollar-pegged payment stablecoin, and that falls under the OCC’s watch, must hold its reserves, honour redemptions, manage its risks, and safeguard customer assets. For an industry that has grown up with a patchwork of state licences and varying standards, a federal rulebook of this kind is a major step towards normalisation, and it gives both issuers and their banking partners a clearer sense of what compliance looks like.

The yield question at the heart of the debate

The most contested part of the GENIUS Act framework is the treatment of yield. The final OCC rule retains the GENIUS Act prohibition on permitted payment stablecoin issuers paying interest or yield to holders solely for holding, using, or retaining their tokens. The logic behind that prohibition is straightforward, and it reflects a long-standing concern in banking policy: if stablecoin issuers could pay yield directly to holders, they would compete directly with bank deposits for ordinary savers’ money, but without bearing the full regulatory burden that banks carry, including deposit insurance, capital requirements, and prudential supervision. Banks have argued forcefully that such an arrangement would be unfair competition and could, at scale, drain deposits from the banking system and weaken lending to households and businesses.

What the final rule did not do, however, is settle every question about yield. It removed a proposed rebuttable presumption that would have provided a test for judging payments made by third parties, leaving the regulator to assess such arrangements case by case, with no definitive list of what is permitted and what is prohibited. That case-by-case approach is both understandable and frustrating. It is understandable because the ways in which yield can be passed to holders are varied and creative — rewards programmes, affiliated platforms, partnerships with exchanges, and other structures can all blur the line between a direct payment by the issuer and an indirect benefit arranged by someone else. It is frustrating because businesses that want to build compliant products crave certainty, and a case-by-case regime means that a structure that seems acceptable today could be judged differently tomorrow, after money has already been spent building it.

Why tokenised deposits are different

This is where tokenised deposits enter the picture, and why banks are so interested in them. Unlike payment stablecoins, bank deposits fall outside the GENIUS yield prohibition. A tokenised deposit is, at its core, a claim on a deposit at a regulated bank, represented as a token that can move on a blockchain or distributed ledger. Because the underlying asset is a bank deposit rather than a stablecoin issued by a payment stablecoin issuer, the prohibition on paying yield to stablecoin holders does not apply in the same way. Banks can therefore explore tokenised products that offer the operational benefits of blockchain settlement — speed, programmability, and round-the-clock availability — while remaining within the familiar framework of banking regulation, including the protections and obligations that come with being a bank.

The shared network the big banks are exploring

The most ambitious version of this idea involves cooperation among rivals. JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are exploring a shared tokenised-deposit network via The Clearing House, according to reporting by the Wall Street Journal in June 2026, also reported by The Block. The network could launch in the first half of 2027 and would support 24/7 settlement of tokenised commercial bank deposits. The involvement of The Clearing House is significant, because it is already a central piece of American payments infrastructure, operating systems that move money between banks every day. A shared network built on that foundation would not be a single bank’s experiment; it would be an industry utility, designed so that a tokenised deposit issued by one participating bank could be accepted and settled by another, much as traditional payments move between banks today.

BNY and the institutional first movers

While the shared network is still being explored, at least one major bank has already moved from discussion to product. BNY launched a tokenised-deposit service for institutional clients in January 2026, focused on collateral and margin workflows. That choice of use case is revealing. Collateral and margin are areas where speed genuinely matters: when markets move sharply, firms need to post collateral quickly, and delays can create risk for everyone involved. A tokenised deposit that can move instantly, at any hour, directly addresses that pain point, and it does so for clients who are already sophisticated, already regulated, and already comfortable with bank relationships. BNY’s early move therefore serves as a useful proof of concept for the wider industry, showing that tokenised deposits can work in live institutional workflows rather than remaining a conference-stage idea.

The CLARITY Act, the midterms, and the politics of crypto law

No account of the stablecoin yield debate would be complete without the wider legislative picture, because regulation in the United States is made by both agencies and Congress, and the two do not always move in step. The CLARITY Act, a broader crypto market-structure bill, has stalled in the Senate, leaving the GENIUS Act framework and agency rulemaking to carry much of the weight for now. That stall matters because the CLARITY Act was intended to answer questions that the GENIUS Act does not fully resolve, including the division of responsibility between regulators for different kinds of digital assets. Until Congress acts, the industry will continue to operate under a combination of agency rules, existing statutes applied by analogy, and case-by-case judgments of the kind the OCC has now adopted for third-party yield arrangements.

Politics may soon change the calculus. The November 3 midterm elections could influence the direction of crypto legislation, and analysis by 21Shares has examined how outcomes might differ depending on which party controls the relevant chambers. That kind of analysis is necessarily speculative — elections produce surprises, and legislative priorities shift once votes are counted — but the basic point is sound: the future of payment stablecoin regulation and the broader market-structure debate will be shaped, in part, by who holds power in Congress after the midterms. For banks and stablecoin issuers alike, that means planning for multiple scenarios rather than betting everything on a single legislative outcome. A tokenised-deposit strategy, which rests on existing banking law rather than on new crypto legislation, is in that sense a hedge against legislative uncertainty as well as a commercial product in its own right.

What this means for stablecoin issuers and users

What to watch next

Several milestones will show how this story develops. The first is the January 18, 2027 effective date of the OCC’s GENIUS Act rules, when the new requirements for reserve assets, redemption, risk management, custody, and oversight will begin to apply in full. The second is any guidance or enforcement action from the OCC on third-party yield arrangements, which will gradually fill in the case-by-case picture that the final rule left open. The third is the fate of the shared tokenised-deposit network explored by the major banks, and whether its first-half 2027 launch target is met, and for which use cases. The fourth is the outcome of the November 3 midterm elections and what it means for the stalled CLARITY Act. Together, these milestones will determine whether tokenised deposits become a mainstream part of American finance or remain a promising institutional niche, and whether the stablecoin yield debate is resolved by law, by regulator judgment, or by the market simply moving on to products that sidestep the question altogether.

FAQ

What are tokenised deposits?

Tokenised deposits are digital representations of commercial bank deposits that move on blockchain rails, supporting 24/7 settlement while remaining bank liabilities under banking regulation.

Why are banks interested in tokenised deposits now?

Because, unlike payment stablecoins, bank deposits fall outside the GENIUS Act yield prohibition, so banks can offer blockchain-based settlement without entering the most contested part of the stablecoin yield debate.

What did the OCC’s GENIUS Act rules decide on yield?

The rules, published October 21, 2026 and effective January 18, 2027, retain the ban on permitted payment stablecoin issuers paying yield solely for holding tokens, but removed a proposed presumption for judging third-party payments, leaving case-by-case assessment.

Which banks are exploring a shared tokenised-deposit network?

JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are exploring a shared network via The Clearing House, which could launch in the first half of 2027 for 24/7 settlement of tokenised commercial bank deposits.

What has BNY already launched?

BNY launched a tokenised-deposit service for institutional clients in January 2026, focused on collateral and margin workflows.

Source: The Digital Banker

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