A group of US banks has backed a new initiative to connect on-chain money movement with existing bank payment infrastructure.

The Clearing House, the US payments company owned by 25 of the country’s largest financial institutions, will operate the initiative, which focuses on tokenised commercial bank money.

The work covers clearing and settlement for tokenised deposits between banks, alongside links to existing payment rails including RTP and CHIPS.

Banks named in the initiative include Bank of America, BMO, BNY, Citi, Citizens, Fifth Third, HSBC, Huntington, J.P. Morgan, KeyBank, PNC, Regions, Santander, TD Bank, Truist, U.S. Bank and Wells Fargo.

The aim is to let bank deposits be used in on-chain payment flows, while keeping settlement inside regulated banking infrastructure.

Tokenised deposits and bank rails

Tokenised deposits are digital representations of commercial bank money. Unlike stablecoins, they remain linked to bank deposits and bank balance sheets, rather than being issued as separate privately backed tokens.

The Clearing House initiative will allow tokenised deposits to clear and settle between banks within existing regulatory, operational and settlement frameworks.

The system will support automated workflows, richer transaction data and 24/7 settlement. It will also link on-chain activity with fiat payment rails, including RTP, its real-time payments network, and CHIPS, its large-value US dollar clearing system.

David Watson, president and CEO of The Clearing House, said the organisation was helping banks scale on-chain money movement by extending the “safety, resiliency, and settlement certainty” of payment rails.

“The banking industry has long provided the trusted infrastructure that underpins the movement of money throughout the global economy,” said Watson. “The Clearing House is proud to help banks scale on-chain money movement by extending the safety, resiliency, and settlement certainty of regulated bank payment rails.”

The initiative could support use cases including programmable treasury operations, real-time liquidity management, cross-border payments, agentic commerce applications, digital asset settlement and automated financial workflows.

Shared infrastructure

Several banks involved in the initiative highlighted the role of shared infrastructure in scaling tokenised deposits.

Citi pointed to the growth of its own tokenised deposit work and the wider development of tokenised securities as reasons for shared clearing infrastructure between banks.

Shahmir Khaliq, head of services at Citi, said the initiative uses The Clearing House’s role in the US banking system to bridge traditional and digital networks.

“With solutions like Citi Token Services now live and at scale, and with tokenised securities rapidly gaining momentum, there is a need for The Clearing House to establish clearing infrastructure across member banks for both traditional and tokenised deposits, facilitating industry-wide 24/7 and interoperable movement of cash and securities in the future,” he said.

HSBC said the initiative could help scale tokenised deposits by connecting on-chain activity with established payment rails. J.P. Morgan described a regulated market-infrastructure solution for clearing and settling tokenised deposits as a building block for scaling on-chain payments.

The comments point to a practical challenge for tokenised deposits: they need common rules and settlement processes if they are to move between institutions, rather than remain inside separate bank systems.

Interoperability issue

Industry reaction also pointed to interoperability as a key issue.

Carl Grimstad, CEO of Lydian, a digital asset payments company that enables merchants to accept crypto payments while receiving settlement in local currency, said the initiative shows that large banks are moving beyond early experiments with tokenisation and looking at how value will move between bank ledgers, public chains and digital assets.

“This announcement shows that 24/7, programmable settlement is becoming increasingly important,” he said.

“But the industry challenge was never creating another tokenised asset. It’s building the infrastructure that allows liquidity to move seamlessly across multiple systems. In truth, it’s not a payment problem we’re facing. We have a translation problem.”

Grimstad added: “Tokenised deposits are an important step forward, but the ones at the front of the race will be the firms building the connective layer between traditional finance and the digital asset economy. In a multi-ledger world, interoperability is the product.”

Open questions

The announcement leaves several details open, including timing, technical design and the first use cases that will go live. It also does not explain how the system would connect with public blockchains, private networks, stablecoins or tokenised asset platforms.

The Clearing House and the banks involved said further work will focus on interoperability standards, implementation and use cases.