Tokenized Deposits vs Stablecoins: JPMD, Bank Tokens Explained

A tokenized deposit is an ordinary bank deposit recorded as a token on a blockchain. Legally it is still money you are owed by a specific bank, not a separate product. A stablecoin is a token issued by a company that holds reserve assets to back it. The difference matters: a tokenized deposit is a claim on a bank's balance sheet and falls under banking law, while a payment stablecoin is a claim on a ring-fenced pool of reserves and, in the US, falls under the GENIUS Act.

Both now run on public blockchains, and the largest banks are building both. This guide explains how they differ on legal claim, interest, insurance and regulation, using JPMorgan's JPMD, HSBC, the Swift and Clearing House bank networks, and SoFi's bank-issued stablecoin as examples. Facts are as of 2 October 2026.

What are tokenized deposits?

When you keep $1,000 at a bank, the bank owes you $1,000. That debt is recorded in the bank's internal ledger. A tokenized deposit records the same debt as a token on a blockchain, so it can move at any hour, settle in seconds and be programmed with smart contracts.

Nothing about the underlying money changes. The bank can still lend against it, as it does with any deposit (this is fractional-reserve banking). The token is simply a new way of recording and transferring an existing liability.

US law treats them this way. The GENIUS Act's definition of "payment stablecoin" explicitly excludes a deposit, including one recorded on a distributed ledger, according to Sidley Austin's analysis of the Act. A tokenized deposit is not a stablecoin in law, even if it looks like one in a wallet.

JPMorgan's JPMD and Kinexys

JPMorgan's blockchain unit, Kinexys, made the most prominent move. On 12 November 2025 the bank said its JPM Coin USD deposit token (JPMD) was available to institutional clients on Base, an Ethereum layer 2 network. It described the token as "a digital representation of a bank deposit on public blockchain" with "near-instant 24/7 settlement" (J.P. Morgan). B2C2, Coinbase and Mastercard completed test transactions.

Two points stand out:

It is for institutional clients only. You cannot buy JPMD on an exchange, and only JPMorgan's institutional clients can hold it.
It is going multi-chain. In January 2026 JPMorgan and Digital Asset said they would bring JPM Coin to the Canton Network in phases through 2026 (CoinDesk, 8 January 2026).

Other bank tokens and networks

JPMorgan is not alone. As of 2 October 2026:

HSBC launched its Tokenised Deposit Service in the US in April 2026, adding it to Hong Kong, Singapore, Luxembourg and the UK, for corporate and institutional clients (PYMNTS, 13 April 2026).
Swift said on 9 July 2026 that its blockchain-based shared ledger was ready for initial deployment, with 17 banks on six continents, including Citi, HSBC and UBS, preparing to pilot cross-border payments in tokenized deposits (Ledger Insights).
The Clearing House, owned by large US banks, announced on 5 June 2026 a shared network for tokenized deposits with JPMorgan, Bank of America, Citi, Wells Fargo and others. It targets the first half of 2027 and has not yet chosen a blockchain vendor (Ledger Insights).
Visa said in July 2026 that its new stablecoin platform will support bank tokenized deposits through Pismo (Cointelegraph).

The common thread is interoperability. A tokenized deposit at one bank is only useful if it can settle with tokens at other banks. A single bank's coin is a closed loop until shared networks like Swift's or The Clearing House's go live.

Stablecoin banks: when a bank issues a stablecoin instead

Some banks are issuing actual stablecoins instead. The GENIUS Act allows subsidiaries of insured banks to issue payment stablecoins (Alston & Bird). The clearest example in 2026 is SoFi:

SoFi Bank N.A. made SoFiUSD available to nearly 15 million members in its app on 27 May 2026, each token "redeemable 1:1 for U.S. dollars through SoFi Bank" (CoinDesk).
On 22 September 2026 SoFi began moving its $25 billion card programme to settlement in SoFiUSD on Mastercard's network (SoFi).

Why issue a stablecoin rather than a tokenized deposit? A stablecoin can circulate to anyone, including non-customers and DeFi protocols, because it is backed by a separate pool of reserves. A tokenized deposit is a liability to a known customer, so it usually stays within a permissioned group. SoFi says its reserves consist "primarily of cash" (SoFi press release).

Tokenized deposits vs stablecoins: the key differences

	Tokenized deposit	Payment stablecoin (US)
Legal claim	A deposit: you are a creditor of the bank	A claim on the issuer, backed 1:1 by segregated reserves
Backing	The bank's whole balance sheet; can be lent out	Cash, Fed deposits, demand deposits, short-term Treasuries; reserves can't be reused
Deposit insurance	FDIC proposes the same coverage as any deposit (proposal, April 2026)	Not federally insured
Interest	Governed by banking rules and the bank's terms	Issuer may not pay interest or yield to holders
Who can hold it	Usually the bank's own (institutional) clients	Often anyone, subject to the issuer's rules
Main regulator	Bank supervisors under existing banking law	GENIUS Act regulators (OCC, FDIC, Fed, states)

Sources for the table: reserves and reuse limits from Alston & Bird; no federal insurance and no interest from Sidley Austin. On insurance, the FDIC proposed on 7 April 2026 that deposit insurance "does not depend on the technology or recordkeeping used" to record a deposit (Federal Register, 10 April 2026). That is a proposal, not a final rule. The same proposal says stablecoin reserves held at a bank are not insured on a pass-through basis to stablecoin holders.

Interest is the real fight

The GENIUS Act bars stablecoin issuers from paying "any form of interest or yield" to holders. Deposits are excluded from the definition of a payment stablecoin, so that ban does not apply to tokenized deposits. Banks can therefore, in principle, pay interest on a tokenized deposit the way they do on a normal account. This is a large part of why banks prefer deposit tokens, and why the question of third-party stablecoin "rewards" is so contested in the CLARITY Act debate. We cover that in CLARITY Act stablecoin yield.

KYC: why bank tokens stay permissioned

A bank deposit comes with full customer due diligence. Everyone who holds a tokenized deposit has to be a verified customer of the bank, or of a bank in the same network. That is why JPMD is limited to institutional clients and why HSBC's service is for corporate and institutional clients only.

Stablecoin issuers also have anti-money-laundering and sanctions obligations under the GENIUS Act (Sidley Austin), but the token itself can usually move between wallets that have not been verified. In both cases, onboarding is typically handled by identity-verification and AML vendors, such as iDenfy, which do document checks, business (KYB) verification and watchlist screening. For more on how this works in crypto, see our KYC in DeFi explainer.

What this means for DeFi users

For now, tokenized deposits are almost entirely outside DeFi. They are permissioned, institutional and run on bank-chosen networks. You will not find JPMD in a liquidity pool. Stablecoins remain the dollars that DeFi actually uses. Total stablecoin supply was about $311.4 billion on 2 October 2026 (DefiLlama).

That could change if bank networks open to verified DeFi venues or if tokenized deposits are accepted as collateral. Until then, the practical choice for on-chain users is between stablecoins, and what matters is the issuer, the reserves and the redemption rights. Our stablecoin issuers guide and proof-of-reserves explainer cover how to check them. JewelSwap's stablecoin farms on Sui use public stablecoins via Scallop and Cetus, not bank tokens; any yield there is variable and comes with smart-contract and market risk.

Frequently asked questions

What is a tokenized deposit?

A normal bank deposit recorded as a token on a blockchain. Legally it is still a deposit, so the holder is a creditor of the issuing bank, and it is excluded from the US definition of a payment stablecoin.

Is JPMD a stablecoin?

No. JPMorgan describes JPM Coin (JPMD) as a USD deposit token, a digital representation of a bank deposit. It launched for institutional clients on Base in November 2025 and is being extended to the Canton Network in 2026.

Are tokenized deposits FDIC insured?

The FDIC proposed on 7 April 2026 that deposit insurance should not depend on the technology used to record a deposit, which would give tokenized deposits the same coverage as ordinary ones. As of 2 October 2026 this is a proposal, not a final rule. Payment stablecoins are not federally insured.

Can tokenized deposits pay interest?

The GENIUS Act's ban on interest applies to payment stablecoin issuers, and deposits are excluded from that definition. Interest on tokenized deposits is therefore governed by ordinary banking rules and each bank's terms.

What is a bank-issued stablecoin?

A payment stablecoin issued by a bank or bank subsidiary, backed by segregated reserves rather than the bank's balance sheet. SoFiUSD, issued by SoFi Bank N.A., is an example. It launched to consumers on 27 May 2026.

Keep reading

This article is educational and isn't financial or legal advice. Legal points summarise the GENIUS Act as analysed by the law firms linked above and the FDIC's April 2026 proposal, which is not final. Bank product details are from company releases and news reports as of 2 October 2026 and may change.

Viktor Vostrikov

Co-Founder

About the author.

Co-Founder at JewelSwap & CMO at iDenfy. Viktor brings his successful track record of superb development & project management.