America’s Biggest Banks Are Building Their Own Digital Dollar to Compete With Crypto

The largest U.S. banks, led by JPMorgan Chase and Citigroup, are planning a shared system for tokenized deposits as the traditional banking industry’s coordinated answer to cryptocurrency, according to people familiar with the discussions in a plan reported Thursday, June 4. The effort would move banks beyond their separate, in-house projects toward common infrastructure for moving digital dollars.

A tokenized deposit is, in plain terms, a digital token that represents real money sitting in a bank account. It is a claim on deposits held at a regulated bank, moved across blockchain-style rails that allow payments to settle in seconds at any hour. That makes it different from a stablecoin, which is a token pegged to the dollar and often issued outside the banking system.

The distinction matters to banks.

A tokenized deposit keeps the money on their books, where they can still lend against it, while a stablecoin does not.

That is the core reason the banks are acting.

Stablecoins issued by crypto-native firms have grown into a large pool of dollars parked outside the banking system. Tether and Circle, the two biggest issuers, together controlled more than $310 billion in stablecoins as of early 2026.

Every dollar held in their tokens, USDT and USDC, is a dollar not held as a bank deposit—money banks earn nothing on and cannot use to make loans.

Left unchecked, that shift threatens the deposit and payments businesses that are central to how banks make money.

The pieces of a joint system already exist inside the biggest banks.

JPMorgan Chase launched a deposit token called JPMD in June 2025 on Coinbase’s public blockchain, known as Base, through its blockchain division Kinexys.

Naveen Mallela, the division’s global co-head, has said the token lets institutional clients send and receive money in seconds, around the clock, bypassing the delays of traditional banking.

The bank expanded the token to public blockchains later in 2025.

Citigroup runs its own service, Citi Token Services, which offers tokenized deposits for corporate treasury and trade-finance clients with near real-time settlement.

The new plan builds on talks that began in 2025, when JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo explored issuing a joint stablecoin.

Those discussions ran through two jointly owned bank ventures: Early Warning Services, which operates the Zelle payment network and the Paze wallet, and The Clearing House, which runs a real-time payments network used by major banks.

A shared tokenized-deposit system would use similar shared rails while keeping the money as bank deposits rather than a separate stablecoin.

The logic mirrors how banks already cooperate.

Just as rival banks share the Zelle network for person-to-person transfers while keeping their own apps and brands, a shared tokenized-deposit system would let them agree on common plumbing to ensure the tokens work across institutions.

That interoperability is the point.

A token that only works inside one bank’s network is far less useful than one that can move seamlessly between banks for faster domestic payments, cross-border transfers, and around-the-clock settlement.

For JPMorgan, the approach reflects a strategy of competing and cooperating at once.

The bank has its own deposit token to keep a first-mover edge while joining an industry group to ensure it has a seat at the table if the market settles on a shared standard.

Other banks are hedging too.

Wells Fargo has filed a trademark for a branded digital dollar, suggesting it may want both a proprietary product and access to shared infrastructure.

The timing is tied to policy.

A federal framework for digital dollars, advanced under the GENIUS Act, has given banks more legal clarity to issue tokens, and the current administration has been broadly supportive of digital finance.

Clearer rules tend to favor regulated, compliant issuers, which is the position banks want to occupy.

There are reasons for caution.

The discussions remain at an early stage and could change.

Profitability is not guaranteed. Analysts have warned that the rich margins crypto-native issuers like Tether currently earn may not be sustainable as competition grows and regulation tightens.

The banks are still weighing how much demand a shared token would actually draw.

For now, the systems are aimed mainly at institutional and corporate clients rather than everyday consumers, used for moving large sums and settling trades.

But the broader direction is clear: the country’s biggest banks are moving to build their own version of the technology that crypto firms pioneered—and to do it together—so that the digital dollars of the future remain bank deposits rather than something issued outside their walls.

JBizNews Desk — Banking & Financial Technology