Major Banks Accelerate Blockchain-Based Digital Money Initiatives
By Ben Rivera — A former engineer turned journalist, Ben is fascinated by the bleeding edge of technology. He explores the moonshots and paradigm shifts that will define the next century. | Last updated: October 13, 2025
Short answer: Major global banks are significantly accelerating their exploration and implementation of blockchain-based digital money, including G7 currency-pegged stablecoins and tokenized deposits. This surge is driven by increased regulatory clarity, the pursuit of greater efficiency in global payments, and a burgeoning institutional interest in digital assets. Banks aim to modernize their infrastructure and capture a share of the rapidly expanding stablecoin market, positioning themselves at the forefront of financial innovation.
Global Banks Embrace Blockchain for Digital Currencies
The financial sector is witnessing a pivotal shift as major banks worldwide actively pursue blockchain-based digital money solutions. These initiatives span various forms, including stablecoins pegged to G7 fiat currencies and innovative tokenized deposit programs. This strategic pivot signals a collective effort to modernize payment infrastructures and integrate the efficiencies of digital assets into traditional finance, promising a future of faster and more transparent transactions across borders.
A notable consortium of ten major international banks, featuring names like Banco Santander, Bank of America, and Goldman Sachs, is jointly exploring the issuance of a 1:1 reserve-backed digital currency. This stablecoin, pegged to G7 fiat currencies, aims to offer a stable payment asset on public blockchains, addressing a critical need for reliable digital value transfer. Their active engagement with regulators underscores a commitment to compliance and robust risk management in this evolving landscape. Read more about the G7 stablecoin initiative.
Key Developments in Tokenized Deposits and Stablecoins
BNY Mellon, a giant in custody services, has launched a pilot program to explore tokenized deposits. This innovative approach seeks to empower clients with blockchain-enabled payments, streamlining infrastructure for real-time, instantaneous, and cross-border transactions. This move builds on their previous collaborations, such as with Goldman Sachs, for blockchain-based tracking of money market fund ownership, highlighting a consistent push towards digital innovation. Discover BNY Mellon’s tokenized deposit pilot.
HSBC has also expanded its Tokenised Deposit Service (TDS) to Singapore, marking its inaugural cross-border application. This blockchain-powered solution facilitates 24/7 instant settlements, initially benefiting Ant International for real-time SGD and USD digital token payments between its Singaporean and Hong Kong entities. Such expansions demonstrate the practical utility and growing adoption of tokenized solutions for global corporate transactions, enhancing liquidity management and payment agility.
Citigroup is deeply invested in the stablecoin ecosystem, with Citi Ventures investing in BVNK, a London-based stablecoin infrastructure company. This aligns with CEO Jane Fraser’s suggestions about potentially launching their own stablecoin and broadening digital asset custody services. Citi is also collaborating with a European consortium to develop a MiCA-compliant euro-denominated stablecoin, indicating a comprehensive strategy to engage with regulated digital currencies. Explore Citi’s stablecoin strategy and investments.
Even Goldman Sachs is making a significant comeback in the crypto space, planning to revive its cryptocurrency trading desk in 2025 under Mathew McDermott. This decision is fueled by substantial institutional interest, with a reported 33% of Goldman Sachs’ family office clients already allocating funds to cryptocurrencies, underscoring the mainstreaming of digital assets within sophisticated investment portfolios.
The Drivers Behind This Digital Transformation
Several critical factors are converging to accelerate banks’ embrace of blockchain-based digital money. Enhanced regulatory clarity, spearheaded by legislation like the GENIUS Act in the U.S. and MiCA regulations in the EU, is providing robust frameworks for stablecoins and digital assets. This legislative evolution is reducing uncertainty and boosting institutional confidence, paving the way for broader adoption and investment.
The demand for greater efficiency is a powerful catalyst. Banks are actively seeking to overcome the limitations of legacy technology and modernize their infrastructure. Blockchain technology promises substantial reductions in transaction costs, significantly faster processing speeds, and the ability to facilitate instant, 24/7 settlements for both domestic and international payments, directly addressing long-standing operational inefficiencies in global finance.
Moreover, there is a growing institutional interest and a substantial market opportunity. The stablecoin market, currently valued around $310 billion, is projected by Citi to reach up to $4 trillion by 2030 in an accelerated adoption scenario. Banks are strategically positioning themselves to capture a meaningful share of this rapidly expanding market, recognizing the immense potential for new revenue streams and client services within the digital asset ecosystem.
Future Implications for Global Finance
The short-term implications of these developments include intensified competition within the stablecoin market as banks introduce their regulated digital currencies, directly challenging crypto-native offerings like Tether. This period will also see accelerated regulatory refinement due to close collaboration between banks and global regulators, and an expansion of pilot programs testing various digital money use cases. These trials are crucial for identifying practical applications and scaling solutions.
In the long term, blockchain-based digital money holds the potential to fundamentally transform global payment systems, leading to more efficient, transparent, and significantly faster cross-border transactions. This could diminish the reliance on traditional correspondent banking networks. The tokenization of traditional assets and money will also pave the way for innovative financial products and services, leveraging programmability for automated payments, enhanced liquidity management, and novel investment opportunities. This shift is poised to redefine market dynamics, with institutional adoption driving the stablecoin market into the trillions, and fostering a convergence with Central Bank Digital Currencies (CBDCs) for a more integrated digital money ecosystem.
Frequently Asked Questions
What are tokenized deposits?
Tokenized deposits are a digital representation of traditional bank deposits on a blockchain network. They allow for instant, 24/7 settlement of payments using blockchain technology, offering enhanced efficiency and speed compared to conventional banking transfers. These deposits remain fully backed by fiat currency held at the issuing bank.
Why are major banks focusing on G7 currency-pegged stablecoins?
Banks are focusing on G7 currency-pegged stablecoins to provide a stable, regulated digital payment asset that mitigates the volatility associated with other cryptocurrencies. Pegging to G7 fiat currencies like the USD or EUR aims to instill confidence, facilitate compliance with existing financial regulations, and support large-scale institutional adoption for payments and settlements on public blockchains.
Next Steps
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