The latest report from the Dallas Fed states that tokenized deposits have the potential to enhance payment efficiency but may also alter the funding structure on which banks rely for lending. If customers can quickly move funds to higher-yielding accounts, the stability of bank deposits could decline, reducing the capacity for long-term loan portfolios.
Deposit velocity is increasing
The report states that distributed ledger technology is driving the development of real-time settlement infrastructure. Unlike stablecoins such as USDT and USDC, tokenized deposits typically operate within regulatory frameworks and can also earn interest.
However, the report also emphasizes that the combination of real-time settlement, smart contracts, and agent-based AI could make it easier for depositors to quickly move funds between banks in pursuit of higher returns, potentially reducing the friction costs that previously supported "sticky deposits."
$700 billion estimate
The Dallas Fed estimates that if deposit sensitivity to interest rate changes increases by 10%, the banking system’s ability to withstand interest rate risk, measured on a 10-year equivalent basis, could decline by approximately $700 billion.
The author also estimates that if the weighted average maturity of deposits were to shorten by 10%, the banking system’s ability to perform maturity transformation could decrease by approximately $580 billion. Maturity transformation refers to banks using deposits that can be withdrawn on demand to fund longer-term loans.
Multiple banks are advancing pilot programs.
The report suggests that if banks wish to maintain their current loan structures, they may need to rely more on term debt financing rather than traditional deposits. This would make the funding sources for lending activities more similar to those of non-bank financial institutions and could increase financing costs for businesses and consumers.
- In October 2025, Custodia and Vantage launched the U.S. tokenized deposit network.
- In February 2026, Barclays Research on tokenized deposits and stablecoin payments
- In March 2026, BMO, in collaboration with CME Group and Google Cloud, advanced 24/7 tokenized cash settlement.
Additional information: Swift launched a pilot in July this year, allowing 17 global banks to transfer tokenized deposits outside business hours, but final settlement still relies on traditional payment systems during business hours.