Stablecoins for Banks, Explained

Twenty-One Institutions and One Missing Name

On September 1, 2026, 21 financial institutions, among them Bank of America, Citi, Goldman Sachs, Wells Fargo, Santander, Deutsche Bank, UBS and MUFG, committed to form a new company to issue stablecoins. The plan is a U.S. dollar coin first, targeted for the first half of 2027, then other G7 currencies with the euro as a priority. Goldman had been a holdout weeks earlier. JPMorgan is not on the list. We covered it here: Goldman Sachs turned up as a founding member of a 21-bank stablecoin company.

In June we wrote that banks had picked tokenized deposits over stablecoins. That framing is retired. They are building both kinds of digital dollar: tokenized deposits for moving money between banks at home, and a shared stablecoin for cross-border and cross-currency flows. If you manage money, own bank stocks or run a corporate treasury, you need to know the difference.

Why Banks Care

Deposits are the cheapest money a bank has. A dollar that sits in a stablecoin is a dollar that is not sitting in a checking account. In April 2025, the Treasury Borrowing Advisory Committee, a group of dealers that advises the Treasury, pointed to the roughly $6.6 trillion of U.S. transactional deposits as the kind most exposed. A December 2025 note by Federal Reserve staff sketched how deposits moving into stablecoins could reduce bank lending, with small businesses among those most affected. Both are illustrations, not forecasts, but they explain why bank treasurers are paying attention.

The reserve income is real money. A stablecoin issuer earns interest on the Treasuries and cash behind its coins. Circle reported $701 million of revenue and reserve income for the second quarter of 2026, of which $668 million was reserve income. Banks would rather keep that spread than watch it leave.

Money that moves at any hour. Corporate clients want to move, program and settle funds at night, at weekends and across borders. Wells Fargo pitches its tokenized deposits exactly that way, including conditional payments written as smart contracts.

Competitor and supplier at once. A Federal Reserve survey of senior financial officers, written up in May 2026, found about half of large banks planning to prioritize issuing tokenized deposits, and about 40% planning to prioritize holding reserves for stablecoin issuers. Banks are fighting stablecoins and selling to them at the same time.

Bank Stablecoins vs Tokenized Deposits

They both look like a dollar on a blockchain. Legally and economically they are different animals.

A tokenized deposit is a deposit. It is the money already in your bank account, recorded on a blockchain. It stays a liability of your bank, sits on the bank's balance sheet and can be lent against like any other deposit. Wells Fargo calls its version a blockchain-based form of commercial bank money. The GENIUS Act spells it out: a deposit recorded using distributed ledger technology is not a payment stablecoin.

A stablecoin is a claim on a reserve pool. Under the GENIUS Act a payment stablecoin must be issued by a permitted issuer, and a bank cannot issue one from the bank itself. It has to use an approved subsidiary. The issuer must hold reserves of at least one dollar for every coin, in cash, insured deposits, Treasuries with 93 days or less to run, overnight repo or government money market funds, and it cannot lend those reserves out or pledge them again.

Insurance. Stablecoins are not FDIC insured, and the law makes it unlawful to suggest they are. Tokenized deposits keep deposit insurance eligibility, and the FDIC proposed in April 2026 to treat qualifying tokenized deposits no differently from other deposits. The usual limit still applies, generally $250,000 per depositor, per bank, per ownership category. A $30 million treasury balance does not become $30 million of insured money because it is on a blockchain.

Yield. The GENIUS Act bars stablecoin issuers from paying holders interest or yield just for holding the coin. Deposits face no such ban.

Who can hold them. Today's tokenized deposits are for institutional and corporate clients of the issuing bank. A stablecoin can travel further: it behaves more like a bearer instrument, which is why banks see it as the tool for cross-border flows.

Who Is Building What

Tokenized deposits

JPMorgan made JPM Coin (JPMD), a U.S. dollar deposit token, available to institutional clients on the Base blockchain on November 12, 2025.

Citi runs Citi Token Services on a private permissioned blockchain connected to its 24/7 USD Clearing, which Citi says serves more than 300 institutions in more than 50 markets. Siam Commercial Bank went live on it in July 2026.

Wells Fargo announced tokenized deposits for corporate and commercial clients on August 4, 2026, starting with a U.S. dollar to British pound pilot on its own blockchain and expanding through 2027. Our take on what it means: the stablecoin war just became a race between trust and portability.

The Clearing House network. In June 2026, The Clearing House unveiled a bank-led network to clear and settle tokenized deposits between banks, backed by a long list of banks including JPMorgan, Bank of America, Citi and Wells Fargo. It chose Quant as a technology partner in September, with availability expected in the first half of 2027. Banks always end up on shared rails, as they did with ACH, Fedwire and CHIPS: JPMorgan, Bank of America, Citi and Wells Fargo are merging their blockchain deposit projects into one network.

Swift. On July 9, 2026, Swift said its blockchain shared ledger was ready for initial use, with 17 banks including Citi, HSBC, BNP Paribas, MUFG, UBS and Wells Fargo preparing to pilot round-the-clock cross-border payments in tokenized deposits. Final settlement still runs through existing systems. HSBC and UOB completed live cross-border transactions on it in August. Our take, for paid subscribers: Swift just put 17 banks on a shared blockchain ledger.

A bank stablecoin

The 21-institution company announced in September is the banks' stablecoin track. It is meant to comply with the GENIUS Act and Europe's MiCA rules where they apply. Its name, ownership, blockchain and reserve manager have not been announced, and the company itself was still to be formed in the second half of 2026, subject to closing conditions.

The reserve suppliers

Every stablecoin needs somewhere to park its reserves, and asset managers want that business. Our read on BlackRock's August moves was that the real prize is becoming the wholesale supplier of reserve assets to stablecoin issuers: BlackRock is bringing its cash business onchain. The GENIUS Act allows those reserves to be held in tokenized form, which is where tokenized Treasuries come in.

The Rules: The GENIUS Act

The GENIUS Act became law on July 18, 2025. The parts that matter most to banks:

• Who can issue. Only permitted issuers: an approved subsidiary of an insured bank, a federally qualified nonbank issuer supervised by the OCC, or a state-qualified issuer.
• Reserves. At least one to one, in the short list of safe assets above, published monthly and examined monthly by a registered accounting firm, with the chief executive and chief financial officer certifying the numbers.
• No lending the reserves, no yield to holders.
• State or federal. Issuers with $10 billion or less outstanding can use a state regime that is substantially similar to the federal one. Above that, they move to federal oversight.
• Cash equivalent status. Only stablecoins from permitted issuers can be treated as cash or a cash equivalent for accounting, or used as a settlement asset for wholesale payments between banks.
• Timing. The law takes effect on January 18, 2027. From July 18, 2028, digital asset firms may not offer U.S. persons stablecoins from issuers that are not permitted.

The regulators were supposed to finish their rules by July 18, 2026. They did not. The OCC issued its final rule on October 21, 2026, effective January 18, 2027, and says it expects to give existing issuers with complete applications pending waivers of up to 12 months. The Federal Reserve proposed its rules on September 24, 2026. The FDIC's rules were still proposals as of late October. Meanwhile the Clarity Act, the wider crypto market structure bill, failed a Senate cloture vote 49 to 50 on September 15, 2026. Our crypto regulation guide has the full picture.

The Market Today

According to DefiLlama, dollar and other stablecoins added up to about $305 billion on October 23, 2026, led by Tether's USDT at about $182.5 billion and Circle's USDC at about $71.9 billion. One detail most coverage misses: that total was about $306 billion a year earlier, so supply has been roughly flat for twelve months. Euro stablecoins are under $1 billion, which helps explain why the bank group named the euro as its priority after the dollar. For the basics of how stablecoins work, see our stablecoins guide.

What It Means for Treasurers and Investors

For corporate treasurers. A tokenized deposit is still a claim on your existing bank, with the same insurance limit, but it can move at any hour and settle on conditions you program. A stablecoin from a permitted issuer is never FDIC insured and pays no yield from the issuer, but once the law takes effect it is the only kind of stablecoin that can count as a cash equivalent on your balance sheet. Both the Clearing House network and the bank stablecoin are aimed at the first half of 2027, so this is a 2027 planning item, not a 2026 one.

For investors. Stablecoin issuers earn most of their money from reserve income, so their earnings rise and fall with short-term interest rates and with competition for balances. Banks are on both sides: they risk losing cheap deposits, and they stand to earn fees for holding reserves and running the rails. Asset managers want to supply the reserves. And independent issuers now face the largest banks in the world building competitors on purpose.

Our view. This is not a winner-takes-all fight. Banks have trust and regulation on their side. Stablecoins have distribution and portability. Expect tokenized deposits to win domestic bank-to-bank flows, stablecoins to keep the edge across borders and on public blockchains, and the banks to try to own a piece of both.

Figures are as of the dates stated. Sources include Public Law 119-27 (the GENIUS Act), the OCC, the FDIC, the Federal Reserve, the Senate roll call record, the Treasury Borrowing Advisory Committee, Circle, JPMorgan, Citi, Wells Fargo, HSBC, The Clearing House, Swift, the 21-institution release published by Santander, and DefiLlama. This guide is education, not investment advice.