Major banks are stepping into the tokenisation arena in a bid to bring together traditional finance and blockchain. JPMorgan and DBS Bank have announced a joint initiative to develop a tokenisation framework for inter-bank deposits — a move designed to create a new mechanism for transferring value across banks that could challenge the dominance of stablecoins in cross-border and institutional transactions.
What are deposit tokens and why now?
The planned framework will issue “deposit tokens” — digital representations of bank deposit balances — that can be moved on-chain between institutions. Under the scheme, clients of JPMorgan and DBS would be able to redeem or exchange these tokenised deposits via both public and permissioned blockchain networks in real time, 24/7.
This initiative comes at a time when banks are actively exploring tokenized deposits: according to a survey by the Bank for International Settlements (BIS), at least one-third of commercial banks had launched, piloted or studied tokenized deposit products as of 2024.
How JPMorgan and DBS plan to make it work
The collaboration reportedly allows institutional clients of both banks to access “round-the-clock availability” for cross-bank on-chain payments.
The framework aims to support both public and permissioned blockchain networks, facilitating interoperability rather than locking the solution into one ecosystem.
The effort appears to support broader ambitions by JPMorgan to tokenize other asset classes — for example, JPMorgan has moved ahead with its tokenisation platform, slated for a 2026 launch.
Why this could shake up stablecoins and cross-border payments
Traditionally, stablecoins (cryptocurrencies pegged to fiat currencies) have been used by institutions and fintech firms to enable fast, cross-border transfers. With banks issuing deposit tokens, two major shifts emerge:
Reduced reliance on externally issued stablecoins: If banks can offer tokenised deposits directly, it potentially reduces the need for third-party stablecoins in inter-bank settlement.
Bank-backed credibility: Deposit tokens may benefit from the regulatory and institutional standing of the issuing banks, which might appeal to larger counterparties and institutions less comfortable with purely crypto-native stablecoins.
Moreover, the interoperable on-chain framework could make cross-bank value transfers faster, cheaper and more transparent — addressing longstanding problems with traditional inter-bank settlement systems.
What challenges remain?
While the concept is compelling, several hurdles remain:
Regulation and compliance: Tokenised deposits still require navigating banking regulations, liquidity rules, cross-border payment laws and potentially securities or payments regulation.
Network, security & interoperability risks: Moving money on-chain across public and permissioned networks adds operational complexity and risk (eg, smart-contract risk, network congestion, key management).
Adoption and ecosystem expansion: The initial roll-out is between two banks and their institutional clients — to realize full potential, broad participation from other banks, fintech firms and markets is required.
Stablecoin competition: Stablecoins already have network effects and infrastructure in place; banks will need to match or exceed these to shift behavior.
Conclusion
The collaboration between JPMorgan and DBS marks a significant step in the evolution of banking and blockchain convergence. By issuing deposit tokens and building an interoperable on-chain framework for 24/7 cross-bank transfer, they are positioning themselves as credible alternatives — to stablecoins and traditional payment rails alike. If successful, this could reshape how institutional value moves across borders and between banks. However, the proof will come in execution: regulatory alignment, technical robustness and broad industry uptake will determine whether deposit tokens move from pilot phase to mainstream use.
