According to The Wall Street Journal, JPMorgan Chase, Bank of America, and Citigroup are advancing a shared, tokenized deposit network operated by The Clearing House, a payments company jointly owned by the banks. The report mentions that some banks internally refer to this network as a "bridge," while other organizations call it a "chain."
At the heart of this system is the conversion of customers' funds deposited in banks into digital tokens that can be transferred on the blockchain. Unlike stablecoins issued by crypto companies and operating outside the banking system, tokenized deposits still correspond to bank deposits themselves, with the funds remaining within the traditional banking system.
Banks respond to stablecoin competition
The report points out that the Clarity Act, currently being pushed forward by the US Congress, may provide a clearer legal framework for stablecoins. If related arrangements allow stablecoins to offer returns to holders, bank deposits may become less attractive to some customers.
For banks, the risks extend beyond payment transactions. If customers massively transfer funds to crypto wallets and hold stablecoins, banks' deposit base could be squeezed, and deposits are a crucial source of funding for loans. This tokenized deposit network aims to provide a payment experience closer to that of stablecoins without allowing funds to flow out of the banking system.
Targeting corporate treasury scenarios
The Wall Street Journal reports that The Clearing House anticipates large multinational corporations will be the primary users of this network. Banks hope to leverage it to penetrate scenarios such as corporate treasury management, real-time liquidity allocation, and cross-border payments.
If the system is successfully implemented, businesses can allocate bank deposits more quickly on-chain and make parts of the payment process programmable. This means that banks do not intend to cede on-chain payment space to crypto-native stablecoins, but are instead trying to compete using regulated bank deposit products.
The deployment of shared networks is accelerating.
David Watson, CEO of The Clearing House, told The Wall Street Journal that this is a significant move for the banking industry and could lead to significant changes in on-chain payments in the future.
From an industry perspective, the joint efforts of major banks to promote shared networks demonstrate that traditional financial institutions are taking a more proactive approach to blockchain payments. In the past, banks focused more on internal pilot programs or individual institutional experiments; now, they are beginning to explore ways to directly address the advantages of stablecoins in terms of speed, cost, and programmability through shared infrastructure.
