Banks are finally waking up to the revolution they were supposed to lead. Across the U.S., institutions from JPMorgan to Citi are quietly minting stablecoins and tokenized deposits that move at the speed of code. The new rails of finance are forming not in Silicon Valley or on Wall Street trading floors, but in the invisible infrastructure between them, where liquidity, compliance, and smart contracts converge.
At the North American Blockchain Summit, executives from Silicon Valley Bank, Grant Thornton, BankSocial, and ZeroHash agreed on one thing: programmable money isn’t replacing banks; it’s transforming them.
TradFi’s Awakening
As stablecoin regulation finally takes shape in the United States, the financial industry is beginning to redraw the map of money movement. The panel “The New Financial Rails: Banking & Stablecoins” at the Summit brought together leaders from banking, auditing, and blockchain infrastructure to discuss how traditional finance is adapting to the tokenized era.
Raveena Kokal, Senior Product Manager of ZeroHash said institutional participation has grown rapidly since the Act’s passage.
She said, “These are no longer VCs, these are Morgan Stanley, SoFi, Interactive Brokers. They’re really interested in getting into the space.”
According to Kokal, the next phase of adoption will see traditional banks issuing their own stablecoins to serve customers directly.
She said, “Just before we got on stage, we heard about Citi being interested in issuing their own stablecoin. Will EverBank do the same? I think there’s an incentive there. We’ll start seeing more banks issue stablecoins so they can support customers with 24/7 trading, instant settlement, and cross-border payments. We’ve seen this with JPM recently. They’ve gone into tokenized deposits in a huge way, and we’re seeing success there. Providing that infrastructure to banks so they can offer these services to clients is what we’ll see come to fruition in the next few months to a year.”
Institutional Momentum
Becky Reed, COO of BankSocial, spent nearly three decades in traditional finance before moving into crypto. She said most banks are still catching up.
She said. “Since the Genius Act has passed, I have spoken probably to more than 10,000 people in the TradFi space, because frankly, they have not been paying attention to this. They were ignoring it for years. They don’t know who Satoshi is. They certainly have heard of Bitcoin. But the questions that I get over and over again are: What are people going to use this thing for? What is the difference between a stablecoin and other cryptocurrencies? These are basic fundamentals that folks in the Web3 space already understand, and the TradFi folks just do not grasp it yet—but they know that they need to be paying attention.”
The Genius Act defined stablecoins as “payment tokens,” but left unanswered is whether consumer-protection rules such as Reg E (Electronic Fund Transfer Act), Reg C (Home Mortgage Disclosure Act), Reg Z (Truth in Lending Act), and Reg D (Reserve Requirements and Savings Accounts) apply.
Reed said, “Now, from a procedural and regulatory perspective, there are all kinds of financial-protection regulations we have to follow in TradFi: Reg E, Reg CC, Reg Z, Reg D. And so far, there has been ambiguity around whether or not these actually apply to a stablecoin—for example, which, as the Genius Act describes it, is a payment token. A payment is absolutely required to follow Reg E from a financial-institution perspective. But right now, there’s not clarity on whether or not that actually is applicable. So I think the TradFi space has a bit of a ways to go to really understand how to manage this. From my perspective, a stablecoin is just a dollar. What’s the difference between it riding on the point-of-sale rails or the ACH rails than DLT rails? I think that all of these Regs apply—we should treat them like we do every other thing we do in TradFi. But we still have a ways to go from a less ambiguous perspective for TradFi to feel super-comfortable yet.”
From Custody to “Cash-as-a-Service”
Markus Vieth, National Industry Leader of Grant Thornton, placed the shift in historical perspective. He said, “We’re talking 1860s banking. Banks used to have their own currencies and bills.”
Tokenization, he argued, will transform banks from passive custodians into infrastructure providers for programmable cash.
He said, “Banks will move from holding deposits to providing cash-as-a-service. When dollars are tokenized, they can carry their own policy through smart contracts. It accomplishes what we’ve always done but faster, cheaper, and better.”
That new model also creates fresh revenue streams.
He added, “Once banks understand how to monetize tokenized money, they’ll have every motivation to participate. The big banks already do, and they’ll be the first to adopt.”
Liquidity, Compliance, and Reality Checks
When Raveena Kokal asked Anthony Vassallo, SVP of Crypto at Silicon Valley Bank, about the most compelling use cases driving adoption, the SVB executive pointed to liquidity management.
Vassallo said, “You have to zoom out and look at what banks are trying to do, what makes things easier for them. I think one thing that people want to jump to is the technology and the enablement that, as you said, stablecoin reserves are some of the stickiest deposits that banks can attract, and a lot of banks want to improve their operations, so it’s a fantastic business to be in. I think that many banks will attempt and most of all fail to issue their own stablecoins, and do not think they need to. I believe that tokenized deposits make a lot of sense within a perimeter or within a consortium of other banks, but we also have to recognize that those would be recognized as liabilities on these banks’ balance sheets.”
Still, he warned that most banks will fail if they issue coins alone.
He said, “Tokenized deposits make sense within a consortium. They’re still liabilities on balance sheets. The real use case is compliant instant transfer, screen the transaction, send it to a whitelisted address, log it, and reduce T-plus-whatever to just T. That’s the future.”
Regional Banks: Fear of Being Left Behind
Reed said anxiety among smaller institutions is widespread but often misdirected.
Reed said, “Everybody’s afraid of being left behind. The first thing they think is, I need to issue my own stablecoin. And I say, let’s talk about why you’d want to do that.”
They can participate simply by holding stablecoin deposits through third-party providers.
She said, “You can’t issue it yourself, you have to go through a service provider. But you can still participate. There’s a lot of misinformation out there.”
Panelists agreed that the market is about to overflow.
Reed said, “There’s going to be a thousand stablecoins, maybe 10,000, in the next two years. Everyone’s rushing to create their own. It’s going to be one of those solutions in search of a problem. Everyone’s afraid they’ll be left behind, but they don’t really understand what they’re rushing toward yet.”
Still, specialized tokens could prove useful: agricultural tokens for supply-chain finance, or sector-specific coins for lending and real-world-asset tokenization.
Tokenized Deposits: Promise and Pain
Vassallo cautioned that implementing tokenized deposits is far from simple.
He said, “They sound very interesting, but they’ll induce migraines for executives who realize how difficult they are to implement, unless they have a trusted infrastructure partner like ZeroHash.”
He described an emerging layer of adjacent banking services, custody, lending, and payments, being built to sit beside existing cores, rather than replace them. The value, he said, lies in instant settlement and reduced intermediaries.
He explained, “Everything becomes almost an NFT in an accounting sense. If banks can reference specific transactions or reinforce credit lines between each other, it simplifies settlement.”
Faster settlement, however, introduces new asset-liability risks.
He said, “If deposits become more fungible and less sticky, it could create liquidity pressure. But with controls and caps, those risks can be mitigated. It’s about QA and governance.”
Consolidation, Not Chaos
Kokal predicted that while experimentation will explode, success will concentrate.
She said, “I don’t think there will be thousands of successful stablecoins. There’ll be consolidation around a few big players. Tokenized deposits are the logical next step because banks keep them on their books and can serve institutional clients directly.”
Kokal cited JPMorgan’s Onyx platform, which now processes roughly $2 trillion in tokenized deposits through its Kynexis system, as evidence that large-scale adoption is already underway.
She said, “That efficiency will proliferate through the rest of the G-SIBs and larger banks.”
Too Many Coins, Not Enough Purpose
Reed closed with a practical reminder: before banks can issue or hold digital assets, their mobile banking infrastructure must connect to Distributed Ledger Technology (DLT).
“Less than 1 percent of institutions offering digital banking today have DLT rails integrated,” she estimated. “How many of you can send or receive crypto from your banking app? If you’re with Credit Union of Texas, you can, they’re one of our clients.”
Issuing a stablecoin, she warned, is pointless if customers can’t use it.
Reed said, “Getting connected to DLT rails is the first thing that needs to happen. Everything else, real-world-asset tokenization and tokenized deposits, depends on that. If you’re not connected, none of it works.”
The Takeaway
The experts agreed that programmable money will not replace banks, but it will still transform them.
Moderator Anthony Vassallo warned, “Obviously, what’s important is that the changes that reflect the sentiment we all have need to be codified into law so that if there is a new administration, they remain. Because at the moment, there’s still risk for some parts of this anyway.”
What began as a crypto experiment is evolving into the plumbing of finance, where compliance, liquidity, and code operate on the same rails, and dollars themselves can carry instructions.
Author: Tim Tolka, Senior Reporter
#Crypto #Blockchain #DigitalAssets #DeFi #Stablecoins #NABS25
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
See Also:
Credit Union of Texas Teams with BankSocial® to Break Crypto Myths | Disruption Banking
Wholesale CBDCs and Stablecoins: A Dual Future for Digital Finance | Disruption Banking
