Three distinct bank-led tokenized deposit networks are now competing for institutional settlement volume, each choosing different blockchain infrastructure and targeting different market segments. HSBC completed its first public blockchain pilot on the Canton Network on April 13, 2026, the same w...
"Banks should be leading the next phase of digital money, not reacting to it." — Gene Ludwig, CEO of Cari Network and former U.S. Comptroller of the Currency
Three distinct bank-led tokenized deposit networks are now competing for institutional settlement volume, each choosing different blockchain infrastructure and targeting different market segments. HSBC completed its first public blockchain pilot on the Canton Network on April 13, 2026, the same week JPMorgan's Kinexys platform reported $5 billion in daily transaction volume with plans to reach $10 billion. Meanwhile, five U.S. regional banks with combined assets exceeding $779 billion announced a Q4 2026 commercial launch for the Cari Network, built on ZKsync's Prividium layer.
The race is no longer about whether banks will tokenize deposits. It is about which network architecture — permissioned enterprise chains, privacy-enabled public blockchains, or zero-knowledge rollups anchored to Ethereum — will capture the bulk of institutional settlement. The stablecoin market, now at $317 billion in aggregate capitalization according to the Federal Reserve, represents the immediate competitive threat these deposit networks aim to neutralize. Unlike stablecoins, tokenized deposits remain on bank balance sheets, preserve FDIC insurance eligibility, and keep funds within the regulated credit intermediation system.
The tokenized deposit landscape in Q2 2026 is defined by three network strategies operating on different infrastructure with different tradeoffs.
| Network | Lead Banks | Blockchain | Daily Volume | Status | FDIC Insured | |---------|-----------|------------|-------------|--------|--------------| | Kinexys (JPMD) | JPMorgan | Base L2 + Canton | ~$5B | Live (institutional) | Yes | | HSBC TDS | HSBC | HSBC ledger + Canton | Not disclosed | Live in 5 markets, Canton pilot complete | Yes | | Cari Network | Huntington, M&T, KeyCorp, First Horizon, Old National | ZKsync Prividium (Ethereum L2) | Pre-launch | Pilot Q3 2026, commercial Q4 2026 | Yes |
JPMorgan operates at the largest scale, with $1.5 trillion in cumulative notional value processed since inception. HSBC has geographic breadth, with TDS live in Hong Kong, Singapore, Luxembourg, the United Kingdom, and — as of April 13 — the United States. Cari Network is designed as a shared interbank rail, distinct from the single-bank models of JPMorgan and HSBC.
Nineteen of the 50 largest U.S. banks are in some stage of developing a tokenized deposit strategy, according to PYMNTS, with four currently having a product in market.
HSBC's April 13 announcement contained two developments: the expansion of its Tokenised Deposit Service (TDS) to U.S. corporate and institutional clients, and the completion of a Canton Network pilot demonstrating atomic settlement of tokenized deposits against other digital assets.
TDS allows eligible clients to convert fiat deposits into digital tokens on a 1:1 basis across seven currencies: USD, GBP, EUR, HKD, SGD, and onshore and offshore Chinese yuan. The service enables 24/7 settlement, programmable payments, and cross-border transfers between treasury centers and subsidiaries.
The Canton pilot marked the first time HSBC issued TDS on a public blockchain. During the controlled test, HSBC simulated issuance, transfer, and atomic settlement — meaning the exchange of tokenized deposits for other digital assets in a single, indivisible transaction. Atomic settlement eliminates counterparty risk by ensuring both legs of a trade complete simultaneously or not at all.
"This work highlights how tokenisation is evolving within the banking sector and the infrastructure needed to support it at scale," said Manish Kohli, Head of Global Payments Solutions at HSBC.
A key limitation: HSBC's TDS currently permits transfers only between a client's own accounts. The bank has stated its next phase will enable client-to-client transfers within HSBC, followed by broader interoperability.
JPMorgan's Kinexys platform — formerly Onyx — represents the highest-volume bank tokenized deposit system in operation. The USD deposit token, designated JPMD, was rolled out on Coinbase's Base Layer 2 network to institutional clients following a pilot with Mastercard, Coinbase, and B2C2.
Current metrics:
In January 2026, Kinexys and Digital Asset announced plans to bring JPMD natively to the Canton Network in phases throughout 2026, covering issuance, transfer, and redemption. This would place both JPMorgan and HSBC deposit tokens on the same network infrastructure, creating the conditions for interbank atomic settlement.
JPMorgan has also tested cross-chain settlement with Chainlink and Ondo Finance, connecting tokenized asset movements to its deposit token infrastructure.
The gap between Kinexys's $5 billion daily volume and JPMorgan's $10 trillion in total daily payments illustrates both the early stage of adoption and the scale of the addressable market. At current rates, tokenized deposits represent approximately 0.05% of JPMorgan's daily payment flow.
The Cari Network represents a structurally different approach. Rather than a single bank issuing its own token on its own ledger, five U.S. regional banks are building a shared interbank network:
Total combined assets: $779 billion. The network runs on Prividium, a private, permissioned blockchain built by Matter Labs on ZKsync technology, anchored to Ethereum.
The timeline: Q3 2026 pilot covering issuance, transfers, and redemptions; Q4 2026 commercial launch. Initially, the network will support transfers between customers of the same bank, with interbank transfers to follow.
The choice of ZKsync-based infrastructure places Cari on Ethereum's security model while using zero-knowledge proofs for privacy. This contrasts with HSBC and JPMorgan's selection of Canton Network, which uses a different privacy architecture based on sub-transaction privacy — where participants see only their portion of a multi-party transaction.
The Cari Network also has a broader distribution channel through Participate, a network of 600 banks that digitizes loan participations. Custodia Bank and Vantage Bank have agreed to supply tokenized deposits for use in these loan transactions.
The Federal Reserve Bank of New York published a staff report in February 2026 — "Stablecoins vs. Tokenized Deposits: The Narrow Banking Debate Revisited" — that frames the core distinction. The differences are not primarily technical; they are balance-sheet and regulatory differences.
| Feature | Tokenized Deposits | Stablecoins | |---------|-------------------|-------------| | Issuer | Banks | Non-bank entities (Circle, Tether) | | Balance sheet | Remains on issuing bank's balance sheet | Backed by reserves (Treasuries, deposits) held off-bank | | FDIC insurance | Yes (up to limits) | No | | Credit creation | Funds available for lending | Funds locked in reserves | | Instrument type | Account-based (like wire transfer) | Bearer instrument (like cash) | | Regulatory framework | Existing bank regulation | GENIUS Act (signed July 2025) |
The monetary policy implication is significant. When $1 moves from a bank deposit to a stablecoin, it exits the fractional reserve banking system. The stablecoin issuer must hold that dollar in Treasuries or bank deposits as reserves. The money multiplier effect — where banks lend out a portion of deposits, generating additional economic activity — does not apply.
The Federal Reserve's March 30, 2026 note on payment stablecoins estimated the stablecoin market at $317 billion, representing more than 50% growth since early 2025. If stablecoins capture a material share of corporate treasury and payment volumes, the effect on bank deposit bases and lending capacity becomes a macroprudential concern.
Tokenized deposits are the banking system's response: matching stablecoins on speed (24/7 settlement), programmability (smart contract-based automation), and accessibility (blockchain rails), while retaining deposits within the regulated perimeter.
The Fed has published three relevant research pieces in early 2026:
The regulatory position is implicit but clear: tokenized deposits, as bank liabilities subject to existing prudential regulation, fit within the current supervisory framework. Stablecoins require new legislation (the GENIUS Act provides this) and create new risks around reserve management and systemic concentration.
The GENIUS Act, signed July 18, 2025, requires payment stablecoin issuers to back tokens with high-quality liquid assets including short-term Treasuries, deposits at depository institutions, and Federal Reserve balances. Non-compliance penalties can reach €15 million or 12.5% of annual turnover under the EU's MiCA framework, which reaches full enforcement on July 1, 2026.
A notable pattern: both HSBC and JPMorgan have selected the Canton Network for interoperability testing. Canton, developed by Digital Asset, is a privacy-enabled public blockchain designed for regulated institutions.
Canton's current footprint, according to its operator:
In February 2026, DTCC and a group of major financial firms executed the first cross-border intraday repo using tokenized U.K. government bonds on Canton. DTCC also plans to enable tokenization of DTC-custodied U.S. Treasury securities on the network, with an MVP in the first half of 2026 and broader rollout in H2 2026.
Canton's integration with LayerZero, announced March 2026, enables routing of tokenized assets across 165 blockchains — a significant interoperability expansion that could connect bank deposit tokens to broader DeFi and institutional settlement ecosystems.
The convergence of HSBC and JPMorgan on Canton suggests the network may become the de facto interbank settlement layer for tokenized deposits, though the Cari Network's Ethereum-anchored approach provides an alternative path.
Three distinct architectures are competing: single-bank tokens on enterprise chains (Kinexys/JPMD), single-bank tokens with public blockchain interoperability (HSBC TDS on Canton), and shared interbank networks on Ethereum L2s (Cari on ZKsync).
JPMorgan leads on volume at $5 billion daily, targeting $10 billion. This is still 0.05% of JPMorgan's total daily payment volume, indicating the scale of the remaining opportunity.
HSBC leads on geographic reach, with TDS live in five markets and seven currencies. Its Canton pilot on April 13 demonstrated the first atomic settlement of bank-issued tokenized deposits on a public blockchain.
Regional banks are building collective infrastructure through the Cari Network, with $779 billion in combined assets and a Q4 2026 launch target. The 600-bank Participate network provides a potential distribution channel.
Tokenized deposits preserve the banking model. Unlike stablecoins, they remain on bank balance sheets, maintain FDIC insurance, and support credit intermediation. This is a structural advantage that aligns bank incentives with adoption.
Canton Network is emerging as common infrastructure for deposit token interoperability, with both HSBC and JPMorgan committing to the platform and DTCC building Treasury tokenization on the same rails.
The stablecoin market at $317 billion represents both the competitive threat and the market sizing benchmark. Banks are not building tokenized deposits to replace internal systems — they are building them to prevent deposit outflows to stablecoin issuers.
The tokenized deposit race is a defensive play wrapped in an infrastructure build. Banks are not adopting blockchain because the technology is superior for internal payments — JPMorgan already moves $10 trillion daily without it. They are adopting it because $317 billion in stablecoins represents deposits that left the banking system, and the trajectory points toward trillions more.
The three network architectures reflect different theories about where settlement will consolidate. JPMorgan is betting on scale and first-mover volume. HSBC is betting on interoperability across jurisdictions. The Cari banks are betting that shared infrastructure will give mid-tier institutions the same capabilities as global banks.
The most consequential development may not be any single token launch but the convergence on Canton Network as common infrastructure. If HSBC and JPMorgan tokenized deposits become interoperable on the same settlement layer, the conditions exist for an interbank tokenized deposit market — the blockchain equivalent of correspondent banking. Whether regional banks on Ethereum-based rails can connect to this emerging standard, or remain a separate ecosystem, will shape whether tokenized deposits consolidate or fragment.
The data is early. $5 billion daily in a $10 trillion-per-day payments system is a rounding error. But the direction is clear, the infrastructure is live, and the regulatory framework — via existing bank supervision for deposits and the GENIUS Act for stablecoins — is in place. The question is no longer if banks will tokenize deposits. It is how fast and on whose rails.