US banking giants JPMorgan, Citi, Bank of America and Wells Fargo are building a joint tokenized custodial network aimed at challenging the dominance of stablecoins. The project is developed by The Clearing House, with a planned launch in the first half of 2027, as its organizers position the Federal Reserve as the most important target audience for this initiative.
The public pitch for the project revolves around efficiency, providing instant settlement within 24 hours, programmable payments and movement of funds at blockchain speed. The real goal is control; If banks owned the tokenized settlement layer, there would be no political or structural loopholes to launch a central bank digital currency (CBDC) for individuals, and no space would be left for stablecoin issuers in the institutional payments ecosystem.
Stablecoin killer? Tokenized deposits against Fedwire
A token deposit is not a new financial asset, but rather a regular bank deposit that is recorded in a common ledger rather than in the books of isolated banks, carries the same credit risk and is subject to the same regulatory treatment and accounting standards. The fundamental change lies in the infrastructure of the colonies.
Fedwire and RTP systems operate in batch cycles or near real-time windows with strict closing times. In contrast, the Tokenized Depository Network (TDN) conducts on-chain settlements continuously, including weekends and holidays.
This time frame is exactly where stablecoins built their business model for enterprises. The treasury teams that manage cross-border settlements using USDC don’t care about monetary philosophy, they care that the Circle network is up and running at 2 a.m. on Sunday, while the JPMorgan network is not. TDN fills this gap without a single dollar leaving the regulated banking system.
The infrastructure already exists in fragments; JPMorgan’s Kinexys platform processes institutional payments through JPM Coin on a private blockchain. The bank also launched a tokenized deposit token on the Base network, Coinbase’s second public layer, in early 2026 for its institutional clients, targeting cross-border payments, daily liquidity and programmable receivables. Similarly, Citi’s token services provide instant digital transfers between New York, London and Hong Kong.
The TDN represents the interoperability layer that connects these siled banking efforts into a single institutional liquidity pool, forming a structured settlement network across the U.S. banking system.
David Watson, CEO of The Clearing House, said the project is a “huge milestone for lenders,” emphasizing that the industry faces a “radically different” future for blockchain payments. This characterization is precise, but also strategically practical; Because the banks offering this network are the same institutions that would be hit hard by either a government digital currency (CBDC) or a stablecoin capturing institutional dollar flows.
Circumventing central bank digital currencies: deliberate regulatory timing
Congressional appetite for a central bank digital currency (CBDC) allocated to individuals by the Federal Reserve is almost non-existent. Concerns about censorship, political stigma, and bipartisan opposition have hampered any direct moves in this direction. Banks are well aware of this and TDN is designed to exploit this situation.
If the private sector provided 24-hour token dollar settlement via regulated bank deposits, the political case for issuing a government digital dollar would collapse. The Fed thus has a modern payments infrastructure without the political responsibility of issuing CBDCs, while banks keep deposits in their system and stablecoin issuers are clamped down. In this equation, everyone wins within the regulated banking system except Tether and Circle.
Progress on the CLARITY Act in Washington adds additional pressure, as banks remain opposed to provisions of the law that make room for interest-earning features on stablecoins, products that would directly compete with bank deposit interest rates.
Having an effective TDN makes this battle easier; If banks already offer native, programmable deposits on the blockchain with protection equivalent to FDIC insurance, the policy case for allowing non-bank stablecoin issuers to pay yields is significantly weakened.
Shahmir Khaliq, head of services at Citi, described the network as “another step that really consolidates” the role banks play in finance, financial management and capital markets. This is not simply a description of a product, but rather an explicit declaration of control over the region.
What banks are actually protecting is the monetary transmission layer, the infrastructure through which dollar liquidity flows from the Fed to the real economy. If this layer is digitized on the networks belonging to banks, they will ensure that they maintain their role as guardians in a financial system based on blockchain.
The article Big banks launch token deposit network to compete with stablecoins appeared first on Cryptonews Arabic.
