Why banks prefer tokenized deposits
Deposits fund lending. When a customer moves $1 million into a stablecoin, that money leaves the bank and ends up in Treasury bills held by the issuer. When the same customer uses a tokenized deposit, the money stays a deposit, and the bank keeps the funding and the margin.
Capital rules point the same way. Under the Basel Committee's crypto standard, which banks in adopting jurisdictions apply from January 2026, many stablecoin exposures can carry risk weights up to 1,250%, which makes holding them at rest very expensive. The Committee is reviewing the standard and expects to give an update by the end of 2026. A bank's own tokenized deposit is simply a deposit, treated under existing rules.
There is also a practical use case. Large crypto-native clients, such as stablecoin issuers, trading firms and hedge funds, hold large stablecoin balances and want to move them into the banking system efficiently. Banks are reluctant to hold third-party stablecoins. A bank token on the same blockchain solves that: the client swaps into the bank's token and now holds a claim on the bank, not a crypto asset.
Why JPMorgan on Ethereum matters
JPMorgan first issued JPMD on Base, Coinbase's network, where Coinbase is an obvious counterparty. Adding Ethereum on October 19, 2026 puts the largest U.S. bank on a public blockchain without a single sponsoring company, where most on-chain dollar liquidity sits. Holders are still restricted to JPMorgan clients, but the signal to other banks is that public chains are acceptable infrastructure. More chains are likely to follow where institutional clients pull it.
