US Banking on Blockchain: The Clarity Act Delay and the Rise of Tokenized Deposits

Senate Bill Delayed as Banks Build Anyway

The Senate has pushed the Clarity Act, a key market structure bill for digital assets, into September. After months of negotiation, the legislation went into the August recess without a final vote, leaving rules for crypto and digital asset markets unsettled for at least several more weeks.

While lawmakers debate, major US banks are not waiting. Institutions including JPMorgan, Citi, Bank of America, and Wells Fargo are already issuing tokenized deposits and testing onchain settlement systems.

What Is a Tokenized Deposit?

A tokenized deposit is a digital representation of a bank deposit on a blockchain. Think of it like a digital IOU: instead of holding a paper or electronic record of your bank balance, the deposit exists as a token on a blockchain network. Each token represents a claim on one specific bank's money.

The important detail is that a token from JPMorgan and a token from a regional bank are different assets. They sit on different balance sheets, and no technology can make them the same thing. This is why interoperability between bank networks is so difficult.

Banks Already Building

JPMorgan has moved institutional payments through its Kinexys platform for years, reporting more than $3 trillion in cumulative transaction volume. The bank now offers JPMD, a deposit token for institutional clients.

Citi runs Token Services for cross-border treasury operations across four markets. In June, seventeen major financial institutions announced that The Clearing House will clear and settle tokenized deposits onchain, with a target of 2027.

Beyond the largest banks, more than 30 institutions have joined the Cari Network, a bank-governed tokenized-deposit network led by former Comptroller of the Currency Gene Ludwig. Over 40 more are in active discussion, representing institutions with more than $10 trillion in combined assets. The network is powered by Prividium, a privacy-focused layer 2 built on ZKsync.

Why Interoperability Remains Unsolved

A tokenized deposit is a claim on one specific bank. A JPMorgan token dollar and a regional bank's token dollar are different liabilities on different balance sheets, and no technology makes them the same asset.

That means interoperability between deposit networks was never going to come from a messaging standard or a token bridge. It comes the way it has always come in banking: through clearing. When money moves between banks, the sending bank's token is redeemed, the receiving bank issues its own, the obligation between the two institutions is recorded and netted against everything else flowing between them, and the residual settles in central bank money.

The engineering challenge is that this machinery now has to meet standards the old rails never faced simultaneously: banks will not publish counterparties, amounts, or payment data to a public ledger; banks will not run their business on infrastructure a competitor controls; and banks will not net obligations on a ledger they cannot independently verify. Privacy, neutrality, and verifiability, all at once.

What Washington Can and Cannot Do

The Clarity Act does not regulate tokenized deposits, and it will not make bank networks interoperable. No statute can turn one bank's liability into another's.

What legislation and regulators can do is remove the uncertainty that sits around the edges of these projects. Clarity would settle jurisdiction over digital asset markets, defining the competitive environment in which bank-issued money will operate alongside regulated stablecoins.

Industry bodies have been specific about what is missing. The Global Financial Markets Association's April 2026 report on digital money lists uniform treatment of tokenized deposits across jurisdictions, and guidance on transferring tokenized deposits outside the issuing bank's network, among the open gaps. Those two items are the regulatory unlock for interbank tokenized money.

Fragmentation Is a Choice

Some worry that a wave of bank-run networks means a new generation of walled gardens. That concern misreads where the fork in the road actually is.

Banks building private, permissioned networks is not the failure mode. It is how regulated institutions have always built, and it is the appropriate way to handle deposit data. The fork is between private networks that are isolated by construction and private networks that are connected by architecture.

In one future, each network is an island, and moving value between them recreates the patchwork of bilateral connections that tokenization was meant to retire. In the other, networks stay private where privacy belongs, interoperate through proofs and clearing rather than through exposure, and settle against neutral infrastructure.

Why This Matters

Connecting to another institution's network is a risk decision, and under regulatory uncertainty the rational default for every bank is isolation, because a closed system only has to answer for itself. Every month without settled rules quietly rewards the walled garden.

Clarity will not regulate tokenized deposits directly, but passing it settles the perimeter of digital asset markets, completes the framework the GENIUS Act started for stablecoins, and tells bank boards and examiners that building on shared onchain infrastructure is a supervised activity with known rules rather than a bet on future forbearance.

What Happens Next

Banks are making the first decision right now, network by network. In September, Washington gets to make the second.

Sources

• CoinDesk