The race to tokenize Wall Street: how JPMorgan, Citi, and Wells Fargo are rebuilding settlement rails

Four of the largest banks in the United States are building a shared network that will let corporate clients move tokenized deposits around the clock, seven days a week. The project, coordinated through The Clearing House, is targeting a first half 2027 launch. It is the clearest sign yet that Wall Street is no longer experimenting with blockchain. It is rebuilding the plumbing.

The phrase “tokenize everything” has been a crypto industry talking point since at least 2018. For most of that time, the institutions that actually control global financial infrastructure treated it as a science project. Pilots were announced, whitepapers were published, and nothing changed about the way a wire transfer actually moved from one bank to another.

That dynamic shifted in the first half of 2026. In a span of roughly 90 days, JPMorgan Chase expanded its Kinexys deposit token network, Wells Fargo committed to tokenized deposits for corporate clients, BlackRock filed to expand its tokenized money market fund lineup, Mastercard added stablecoin settlement rails, the DTCC recruited more than 50 firms for a production tokenization service, and Citi created a new class of tokenized securities for private markets. These are not concept papers. They are production deployments with target dates, partner lists, and capital committed.

This feature maps the three layers of that buildout: the money layer where payments are being redesigned, the asset layer where securities are moving on chain, and the infrastructure layer where the back office systems that settle trillions of dollars in daily transactions are being replaced.

The money layer: tokenized deposits versus stablecoins

The most consequential project in the current wave is the shared tokenized deposit network being built by JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, and The Clearing House. According to the Wall Street Journal, the network is targeting a first half 2027 launch and will allow corporate clients to move tokenized deposits between participating banks on a 24/7 basis.

A tokenized deposit is not a stablecoin. A stablecoin like USDC or USDT is a bearer instrument: whoever holds the token holds the value, and the issuer (Circle, Tether) maintains a reserve to back it. A tokenized deposit remains a liability of the issuing bank. When JPMorgan creates a deposit token through its Kinexys network, the token represents a claim on JPMorgan, just as a traditional deposit does. The difference is that the claim can settle in seconds instead of hours and can move outside of the Federal Reserve wire system operating window.

That distinction matters for two reasons. First, tokenized deposits inherit the existing regulatory framework for bank deposits, including FDIC insurance eligibility and the capital requirements banks already meet. No new legislation is required. Second, they create a competitive threat to the stablecoin issuers that have captured the market in their absence. If JPMorgan can offer its corporate clients instant settlement through a deposit token, the incentive to hold USDC for the same purpose diminishes.

JPMorgan is furthest along. Its Kinexys platform, formerly known as JPM Coin, already processes billions of dollars in daily transactions for institutional clients. The platform operates as a permissioned blockchain that handles intraday repo, cross border payments, and foreign exchange settlement. Jamie Dimon confirmed during the bank’s most recent earnings call that crypto trading for institutional clients is now operational, a shift from the bank’s historically skeptical public stance.

Wells Fargo announced in August 2026 that it will begin offering tokenized deposits to corporate clients this fall. The bank, which manages over $2 trillion in assets, is joining the shared network rather than building a proprietary system. That decision is significant. A single bank token has limited utility. A shared network where deposits can flow between JPMorgan, Citi, Bank of America, and Wells Fargo starts to resemble an alternative payment rail.

Citigroup is pursuing a parallel but distinct strategy. In addition to joining the shared deposit network, Citi has invested in tokenized securities infrastructure separately. The bank’s Digital Depositary Receipts product and its participation in the DTCC tokenization pilot position it at the intersection of payments and capital markets tokenization. Bank of America, the third pillar of the shared network, has been quieter publicly but holds more blockchain related patents than any other US financial institution.

The architecture of the shared network matters as much as its participants. The Clearing House, which already operates the RTP real time payments network used by US banks, provides the coordination layer. Using an existing industry utility rather than a single bank’s proprietary infrastructure reduces the competitive tension that would otherwise prevent rivals from collaborating. Each bank issues its own deposit token, but the tokens are interoperable on the shared settlement layer.

The payment networks are moving simultaneously. Mastercard said in June that it would add stablecoin settlement options for card issuers and acquirers, supporting USDC, PYUSD, and RLUSD. Visa is testing private stablecoin settlement with Brale on the Canton Network, a privacy focused blockchain designed for institutional use. SoFi launched its own bank issued stablecoin, SoFiUSD, on its retail banking platform, making it the first US national bank to issue a stablecoin directly to consumers.

“Blockchain adoption will be defined by practical, production grade applications in the world’s largest markets,” Yuval Rooz, co founder and CEO of Digital Asset, said in June when his company raised $355 million to scale the Canton Network. The fundraise itself underscores the point. Institutional capital is flowing not into speculative tokens but into the infrastructure that will support tokenized settlement for years to come.

The asset layer: from money market funds to private shares

If the money layer is about moving value faster, the asset layer is about making securities programmable. The highest profile effort belongs to BlackRock, which launched its first tokenized money market fund, BUIDL, in 2024. The fund crossed $1 billion in assets under management and has since been joined by two additional tokenized funds: BSTBL, which runs on Ethereum and provides stablecoin yield exposure, and BRSRV, which supports stablecoin reserve management.

BlackRock has filed with the SEC to expand the suite further. The filings signal that the world’s largest asset manager views tokenized funds not as a novelty but as a scalable distribution channel. The advantage is structural. A tokenized fund share can settle in seconds, be used as collateral in real time, and trade outside of traditional market hours. For institutional investors managing cash positions across time zones, those properties solve real operational problems.

The next frontier is tokenized access to private markets. In June, Citi launched Digital Depositary Receipts for private company shares. The product creates a regulated pathway for investors to buy fractional interests in pre IPO companies. The timing is deliberate. Demand for private market exposure has surged as companies like OpenAI and Anthropic have delayed public listings while reaching valuations that would have triggered IPOs a decade ago.

“For decades, getting in at the IPO price has been a privilege of geography and net worth. That worldview is breaking down,” Mark Greenberg, global head of Payward Services, said in June. Kraken’s parent company has pushed tokenized IPO access through its xStocks platform, which offers tokenized US equities to non US customers. Coinbase has outlined similar plans.

A pilot completed in May demonstrated what cross border tokenized settlement looks like in practice. Ondo Finance, Kinexys, Mastercard, and Ripple completed a joint exercise to redeem a tokenized US Treasury fund on blockchain rails. The transaction settled across borders and across chains, proving that the plumbing exists even if the regulatory framework is still being assembled.

The infrastructure layer: where the real transformation is happening

The deepest and least visible shift is happening in the systems that move assets behind the scenes. The Depository Trust and Clearing Corporation, which processes virtually every US securities transaction, announced in May that it is building a tokenization service with more than 50 financial firms. The DTCC plans to facilitate initial production trades for select tokenized real world assets in July 2026, with a broader rollout targeted for October.

The DTCC handles roughly $2.4 quadrillion in securities transactions annually. When an organization of that scale commits to tokenized settlement rails, the signal is qualitatively different from a fintech startup launching an RWA protocol. The DTCC is not competing with existing infrastructure. It is the existing infrastructure, and it has decided that blockchain based settlement is the next generation of that infrastructure.

Custody is the other critical infrastructure layer. Standard Chartered agreed in May to acquire the crypto custody business of Zodia Custody, a firm it originally helped establish. The acquisition folds digital asset safekeeping directly into the bank’s existing custody operations. “Digital asset custody forms the foundational layer that underpins all digital asset use cases for financial institutions,” a joint report from Ripple and Quinlan and Associates noted in February.

The infrastructure investments reveal a calculation that the trading desks and ETFs of the first institutional crypto wave were just the entry point. The second wave is about using blockchain to settle transactions, manage collateral, issue securities, and move money. Those functions sit at the core of the financial system, not at the periphery.

The competitive threat to stablecoin issuers

The bank led tokenized deposit network creates a direct competitive challenge to Circle and Tether. Today, stablecoins fill the gap that banks have left open: they provide instant, 24/7 settlement in a form that works across borders. The total stablecoin market capitalization exceeds $160 billion, and USDT and USDC together account for the majority of that figure.

If JPMorgan, Citi, Bank of America, and Wells Fargo can offer their corporate clients the same speed and availability through tokenized deposits that carry FDIC insurance and require no new counterparty relationship, the value proposition of holding a third party stablecoin weakens. The banks do not need to win the retail user. They need to capture the corporate treasury flow that currently uses stablecoins as a settlement shortcut.

Circle’s response has been to pursue its own banking relationships and a potential IPO. Tether has diversified into US Treasury holdings and AI infrastructure. Both are positioning for a world where bank issued tokens exist alongside independent stablecoins, rather than one where stablecoins face no institutional competition at all.

What this means for crypto native protocols

The institutional buildout is not uniformly bad for crypto native projects. Several are being pulled into the institutional stack rather than displaced by it. Ondo Finance participated in the Kinexys and Mastercard cross border settlement pilot. Ripple provided the cross chain infrastructure. Stellar’s public blockchain is being connected to the DTCC tokenization service. Canton Network, built by Digital Asset, is the settlement layer Visa chose for its private stablecoin pilot.

The pattern suggests that institutions want the programmability of blockchain but prefer to select specific protocols rather than adopt the public chain ecosystem wholesale. The winners among crypto native projects will be those that provide infrastructure services, settlement layers, and interoperability tools that institutions cannot easily build themselves.

DeFi protocols face a more ambiguous future. Permissionless lending and automated market making remain structurally incompatible with the compliance requirements that govern institutional capital. But the boundary between institutional and permissionless finance is not fixed. As tokenized assets proliferate, the demand for on chain liquidity venues that can serve both categories will grow.

The Layer 1 blockchains that host tokenized assets also stand to benefit from the institutional wave. Ethereum remains the default settlement layer for most tokenized funds, including BlackRock’s BUIDL and BSTBL. But Stellar, Solana, and purpose built chains like Canton are competing for institutional deployments. The chain that captures the most tokenized asset volume will accrue transaction fees, validator revenue, and ecosystem gravity that reinforces its position over time. For public chain ecosystems, institutional tokenization represents the largest potential source of sustainable on chain revenue since DeFi summer.

The custody question: who holds the keys

Every tokenized asset needs a custodian, and the fight over who provides that custody is as consequential as the fight over who issues the tokens. Standard Chartered’s acquisition of Zodia Custody in May was the first time a major global bank absorbed a dedicated digital asset custodian into its core operations. The move signals that banks intend to own the full stack: issuance, settlement, and safekeeping.

The custody landscape is splitting into two tiers. Crypto native custodians like Coinbase Custody, BitGo, and Fireblocks serve the existing digital asset market. Bank affiliated custodians like BNY Mellon, State Street, and now Standard Chartered are positioning for the institutional tokenization market. The two tiers serve different clients with different compliance requirements, but they are converging on the same underlying technology: multi party computation, hardware security modules, and smart contract based access controls.

The custodian that can bridge both worlds, serving institutional clients who hold tokenized deposits and fund shares while also supporting the broader universe of digital assets, will capture a disproportionate share of the market. That is why every major custody announcement in 2026 has emphasized interoperability and multi asset support rather than specialization in a single asset class.

The total addressable market for tokenized securities is staggering. Boston Consulting Group estimated in 2024 that tokenized assets could reach $16 trillion by 2030. McKinsey projected a more conservative but still significant $2 trillion in tokenized assets excluding stablecoins and deposits by the same year. The actual figure will depend on regulatory clarity, interoperability between networks, and whether institutional clients adopt tokenized products for their operational advantages or continue to treat them as an incremental improvement over existing systems.

The regulatory tailwind

The timing of the institutional push is not accidental. The regulatory environment in the United States has shifted from active hostility toward cautious accommodation. The SEC approved spot bitcoin and ether ETFs in 2024. The Clarity Act, currently working through the Senate, would provide a framework for classifying digital assets as securities or commodities. South Korea unveiled a draft Digital Asset Basic Act in April. The UK has laid unified regulatory rails for stablecoins and tokenized deposits.

Banks read regulatory signals before they commit capital. The current wave of tokenization projects reflects a collective judgment that the regulatory direction favors institutional blockchain adoption, even if the specific rules are still being written. No major US bank would announce a tokenized deposit network targeting 2027 if it believed the regulatory environment would reverse course.

The speed advantage in real numbers

The practical case for tokenized settlement comes down to time and cost. A standard domestic wire transfer through the Federal Reserve settles during Fedwire operating hours, roughly 8:30 AM to 6:30 PM Eastern Time on business days. An international wire through the SWIFT network takes one to five business days depending on the corridor, the number of correspondent banks involved, and the compliance checks required at each step. Each intermediary adds cost and delay.

A tokenized deposit on the Kinexys network settles in seconds. The JPMorgan, Citi, UBS cross border payment test completed settlement in an average of 80 seconds. That speed differential is not marginal. For a corporate treasurer managing cash positions across multiple countries and time zones, the difference between five day settlement and 80 second settlement changes the amount of capital that must be held in transit at any given moment.

The cost structure is equally significant. SWIFT payments carry fees at each correspondent bank in the chain, typically ranging from $25 to $50 per intermediary. A complex cross border payment might pass through three or four correspondent banks before reaching the beneficiary. Tokenized settlement on a shared ledger eliminates the correspondent chain entirely. The transaction moves from sender to receiver in a single atomic operation.

These are the economics that explain why the largest banks in the world are investing in tokenized infrastructure despite the upfront cost of building it. The savings from eliminating settlement delays, reducing counterparty risk during the settlement window, and removing intermediary fees accumulate to billions of dollars annually across the financial system.

The Asia factor: South Korea, Singapore, and Hong Kong

The tokenization push is not limited to the United States. South Korea unveiled a draft of the Digital Asset Basic Act in April 2026 that would establish bank style rules for stablecoin issuance and create a comprehensive regulatory framework for digital assets. The country has already trialed tokenized bank deposits for government operational spending, and Samsung’s recent move to integrate stablecoin support into 800 million Galaxy phones reflects a broader national strategy to become a hub for digital asset infrastructure.

Singapore’s Monetary Authority has been running Project Guardian since 2022, a collaborative initiative with major banks to test tokenized bonds, foreign exchange, and asset management. Hong Kong is piloting a wholesale CBDC sandbox that includes tokenized deposit functionality. The Bank of England has stated publicly that tokenized deposits may overtake stablecoins within five years in the UK payments landscape.

The concurrent global buildout creates network effects. As more jurisdictions establish regulatory frameworks for tokenized assets, the interoperability challenge becomes the binding constraint. A tokenized deposit that works on JPMorgan’s Kinexys network needs to be recognizable and settleable on infrastructure operated by DBS in Singapore or HSBC in Hong Kong. That interoperability layer is where much of the next phase of development will concentrate.

What to watch

The Clearing House network launch timeline. The shared tokenized deposit network is the single most consequential project in the current wave. A delay past the first half 2027 target would signal institutional hesitation. An on time launch would validate the thesis that bank issued tokens are coming for the stablecoin market.

DTCC production trades in October. The move from pilot to production for tokenized real world asset settlement through the entity that clears virtually all US securities transactions would mark a point of no return for institutional tokenization.

BlackRock’s tokenized fund expansion. The SEC filings for additional tokenized funds signal intent. The pace and scale of launches will indicate whether BlackRock sees tokenized funds as a niche product or a core distribution channel.

Stablecoin issuer responses. How Circle and Tether adapt to bank issued competition will shape the stablecoin market for the next five years. Circle’s IPO trajectory and Tether’s diversification strategy are both worth monitoring.

Cross border interoperability. The Ondo, Kinexys, Mastercard, and Ripple pilot proved that cross chain, cross border tokenized settlement is technically possible. Whether it becomes commercially viable at scale depends on regulatory harmonization across jurisdictions.

The transition from pilot programs to production infrastructure is the defining story of institutional crypto in 2026. The banks, asset managers, and clearinghouses that are committing capital and engineering resources to tokenized systems are making a bet that the next generation of financial infrastructure will run on shared ledgers rather than bilateral messaging networks. If they are right, the financial system that emerges on the other side will look fundamentally different from the one that exists today. The rails will be faster, the assets will be programmable, and the intermediaries that survive will be those that adapted early enough to remain relevant.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency and tokenized asset investments carry significant risks. Always conduct your own research before making any financial decisions. The information in this article is current as of August 4, 2026.