How Banks Are Rebuilding Finance For The On-Chain Era: Report
U.S. banks are edging into the on-chain era in measured steps. Leadership teams are not chasing meme tokens or speculative products for retail customers. Instead, attention rests on payments, deposits, custody, and fund services that now sit on decades-old systems. Those foundations are being rebuilt on distributed ledgers in ways most users never see.
From Speculation To Financial Plumbing
Large U.S. banks are not trying to lead the next speculative crypto cycle. Board discussions focus on how to modernize core financial plumbing without breaking existing obligations. The goal is better infrastructure for money movement, not new risky assets.
Work centers on cross-border payments, liquidity management, deposit transfers, and fund operations. Most upgrades sit behind the scenes in settlement engines and ledgers. Retail and corporate clients still see familiar portals, even while transaction flows start to move on-chain.
Tokenized Finance As The Organizing Theme
Tokenization now anchors most on-chain projects inside major institutions. In this setting, tokenized instruments represent traditional financial claims such as deposits or fund shares. The legal claim does not change, but the record of ownership shifts to a ledger.
These tokenized claims are designed to move with embedded rules and automated settlement. Smart contracts can handle release conditions and cut-off times. Real-time reconciliation becomes possible because every participant reads the same ledger state. Counterparty risk can fall when settlement happens faster and with fewer manual steps, while activity stays inside existing regulatory frameworks.
Deposit Tokens And Bank Money On-Chain
The most apparent indicator of this change is the emergence of tokenized deposits commonly referred to as deposit tokens. A digital representation of a commercial bank deposit is known as a deposit token. The instrument is put out and redeemed by a bank which is under regulation, and is a claim on that bank.
This structure differs from stablecoins issued by nonbanks. Deposit tokens sit inside existing banking law and supervision. Balances usually stay on core systems, while a linked ledger mirrors those balances as tokens for on-chain transfers. Redemption burns the token and restores a normal deposit balance in the bank’s records.
JPM Coin And The Kinexys Platform
JPMorgan has been one of the earliest movers in deposit tokens. The JPM Coin system is positioned as a deposit token for institutional clients. According to the bank, JPM Coin supports real-time, peer-to-peer transfers between approved participants on blockchain-based rails and operates around the clock.
Later in 2024, JPMorgan redefined the wider blockchain division as Kinexys. The rebrand positioned Kinexys as a payments platform, tokenized asset platform, and programmable liquidity platform. Without posing it as a distinct crypto venture. The same platform forms the basis of newer programs such as a token on U.S. dollar deposits on the infrastructure and the introduction of tokenized fund products.
Citi Token Services In Production
Citi has followed a similar path with Citi Token Services. In September 2023, the bank announced a platform that integrates tokenized deposits and smart contracts into institutional cash management and trade finance. The service converts deposits into digital tokens that move across Citi’s network with programmable settlement features.
By October 2024, Citi reported that its tokenized cash service had moved from pilot to live production. Institutional clients used the platform for multimillion-dollar transactions. Tokenized deposits supported always-on liquidity movements and trade-related flows, while legal claims remained within standard Citi deposit structures.
Shared Experiments With The Regulated Liability Network
On-chain banking experiments do not stop at single-bank platforms. The New York Fed’s New York Innovation Center has described a proof of concept for a Regulated Liability Network, often shortened to RLN. The project brought together banks including BNY Mellon, Citi, HSBC, PNC, TD Bank, Truist, U.S. Bank, and Wells Fargo, along with Mastercard.
Related: JPMorgan Crypto Plans Point to Bank-Led Market Expansion
The RLN proof of concept simulated interbank payments using tokenized commercial bank deposits. It also included a theoretical wholesale central bank digital currency representation in the same controlled environment. The tests showed how regulated liabilities could move and settle on a shared ledger while staying under existing supervisory structures.
Building The Custody And Safekeeping Layer
Any on-chain system that moves real assets needs strong custody and governance. U.S. banks have been extending long-standing safekeeping roles into the digital-asset space to provide that layer.
In October 2022, BNY Mellon announced that its Digital Asset Custody platform was live in the United States. Select institutional clients gained the ability to hold and transfer Bitcoin and Ethereum with the bank as custodian. The service was presented as an extension of traditional safekeeping, not as a speculative trading arm.
Regulators have elaborated what is permitted in this field. In Interpretive Letter 1170, the Office of the Comptroller of the Currency wrote that national banks can offer cryptocurrency custody services to their clients.
A 2025 paper on crypto asset safekeeping by bank organizations was subsequently issued by the U.S. Federal Reserve. This gives anticipations concerning risk management, internal controls, and operational resilience.
In January 2023, the Federal Reserve, the Federal Deposit Insurance Corporation and the OCC released a joint statement. It admitted some risks associated with crypto-asset operations and union with selected crypto-sector companies. The message advised caution in due diligence and sound governance of any work involving digital-assets.
Tokenized Money Market Funds And MONY
Beyond payments and custody, banks are testing tokenized versions of familiar investment products. J.P. Morgan Asset Management’s My OnChain Net Yield Fund, often called MONY, is a clear example of that activity.
In December 2025, the firm announced MONY as its first tokenized money market fund. The fund’s shares are issued as tokens on the public Ethereum blockchain and are powered by Kinexys Digital Assets. According to the announcement, JPMorgan seeded the fund with 100 million dollars of its own capital.
The fund is described as a private, tokenized representation of a traditional money market fund rather than a crypto-native yield product. The underlying portfolio follows a standard money-market strategy. The tokenized structure changes how ownership is recorded and transferred, not the risk profile of the assets held.
This step is significant because it links tokenized cash and tokenized yield-bearing instruments within familiar regulatory structures. Deposit tokens and tokenized fund shares can interact on a ledger while staying under established compliance models. That pattern illustrates how traditional asset managers are testing public blockchains without abandoning existing safeguards.
Major U.S. Bank On-Chain Initiatives
| Institution | Focus Area | Example Initiative | Key Details |
| JPMorgan / Kinexys | Deposit Tokens, Tokenized Funds | JPMcoin; Kinexys; MONY fund | Deposit-Ledger And Payment Rail; Tokenization Platform; Tokenized Money Fund On Ethereum Seeded With $100m. |
| Citi | Tokenized Cash And Trade | Citi Token Services | Tokenized Deposits For Cross-Border Payments And Trade Workflows; Now Live For Institutional Clients. |
| BNY Mellon | Digital-Asset Custody | Digital Asset Custody Platform | Live In The Us Since Oct 2022; Lets Select Clients Hold And Transfer Bitcoin And Ethereum. |
| RLN participants + NYIC | Shared Settlement Testing | Regulated Liability Network Proof Of Concept | Simulated Interbank Payments Using Tokenized Deposits And A Theoretical Wholesale CBDC On A Shared Ledger. |
| J.P. Morgan AM | Tokenized Investment Funds | My Onchain Net Yield Fund (MONNY) | Tokenized Money-Market Fund On Ethereum For Qualified Investors, With Daily Yield. |
Regulatory Clarifications For Bank On-Chain Activity
The regulatory environment has evolved alongside these pilots. Banks now work with more detailed guidance than in the early days of digital-asset experiments.
In March 2025, the OCC clarified that national banks may engage in certain crypto-related activities, including custody and some stablecoin and payment functions. At the same time, the agency rescinded earlier guidance that had forced banks to seek supervisory non-objection before moving ahead with such activities.
The OCC has also issued a series of interpretive letters on related questions. Interpretive Letter 1172 addresses banks holding deposits that back some types of stablecoins. Interpretive Letter 1174 discusses how banks may use distributed ledger networks and stablecoins for payments. Examination guidance explains how supervisors will review these activities in practice.
Conclusion
Taken together, these moves show U.S. banks quietly preparing for an on-chain future. Core services like deposits, payments, custody, and money market funds are being rebuilt in tokenized form and tested in pilots such as JPM Coin, Citi Token Services, the Regulated Liability Network, BNY Mellon’s custody platform, and the MONY fund. OCC and Federal Reserve guidance keeps this shift within familiar guardrails while the plumbing of finance moves onto distributed ledgers.
