JPMorgan can move more than $3 trillion through its Kinexys blockchain platform. Citi Token Services handles billions of dollars in cross-border payments each day. On paper, tokenized money is already a very serious banking business.
There is just one catch: most ordinary customers are nowhere near it.
The biggest banks are using blockchain to modernize payments and internal financial infrastructure, but much of that activity remains confined to institutional clients or permissioned networks. For consumers with a standard savings account, the blockchain revolution is still mostly happening behind a closed door.
That divide is becoming the interesting part of the story.
Mintoo Bhandari, founder of U.K. challenger bank Monument, described most bank-issued digital money projects as internal exercises. “Most of the coins that have been minted and are being used for money transfer are all internal projects,” he said.
The question, Bhandari added, is whether any of that is actually changing the experience for customers. “Is that really moving the needle for the whole bank and for the consumer? Not yet.”
Monument is now betting on a different route, alongside privacy-focused blockchain Midnight: bring regulated, interest-bearing deposits onto blockchain infrastructure while making the technology effectively invisible to the customer.
Why tokenized deposits are still stuck inside the bank
The problem starts with infrastructure that was never designed for today’s financial plumbing.
“99% of the banks in the world are like, ‘Yeah, we’re really digital, we have an app!’,” Bhandari said. “But the reality is they’re struggling with legacy architectures that go back to the 1970s that they cannot leap.”
For large institutions, that can mean several different systems handling essentially the same job.
Jerald David, CEO of Lynq Network, said treasury teams may be dealing with a JPMorgan tokenized deposit for one customer, a regulated stablecoin for another and a traditional correspondent banking account for a third.
The issue is not simply complexity. It is where the money sits.
“what clients can’t afford are separate pools of liquidity locked up on every network they access, because idle liquidity fragmented across five networks is five times the capital inefficiency of idle liquidity sitting in one place,” David said.
Tokenized deposits have a potentially important distinction from stablecoins. They remain claims on the bank that issued them, can carry interest and stay inside the regulated banking system. In theory, they could also be programmed to settle alongside tokenized assets.
But making that system work beyond a bank’s own walls creates another problem: privacy.
Tokenized deposits have a privacy problem too
A bank cannot simply put customer transaction histories and commercial relationships on a public blockchain and call it progress.
Fahmi Syed, president of the Midnight Foundation, said banks using private blockchains face a different obstacle: getting those systems to communicate without exposing sensitive information.
“Once you create a private blockchain, how do you then speak to another private blockchain? You then have to use a bridge or some other mechanism, and at that point, you have data leakage.”
Midnight’s approach relies on zero-knowledge proofs, which are designed to let institutions verify whether a transaction or customer meets certain conditions without revealing the underlying personal information onchain.
That matters because the real promise of tokenized money is not simply moving a digital representation of cash from one wallet to another. It is making capital usable across systems that were built with different rules.
David offered a simple example: a fund receives stablecoins on a Saturday morning. The transaction settles, but the fund may need the money to cover a margin call before markets open Monday. Its prime broker’s treasury operation, meanwhile, works during banking hours and does not accept digital assets.
The money is technically there. It just cannot be used where it is needed.
“The capital exists, it’s just dislocated,” David said. “It’s simply not usable where and when it’s needed.”
That may be one of the less glamorous problems blockchain banking is trying to solve: not whether money can move, but whether it arrives in a form that the next financial system will actually accept.
Monument’s proposal pushes the idea one step closer to everyday banking.
The U.K. challenger bank plans to tokenize up to £250 million, or about $335 million, of retail customer deposits on Midnight. Those deposits would remain interest-bearing, backed by Monument and redeemable one-for-one in pounds sterling. They would also retain Financial Services Compensation Scheme protection, subject to the scheme’s limits.
Customers, however, would not need to think about any of this.
Bhandari said the goal is for people to experience the product as a conventional sterling deposit that can be withdrawn on demand, without needing to understand blockchain or cryptocurrency.
That is where the experiment becomes bigger than another institutional tokenization project.
Monument said the longer-term plan is to use those regulated deposits as a gateway to products such as fractional private equity, tokenized structured products and Lombard lending, subject to the required permissions.
In other words, the blockchain would sit underneath the banking app rather than becoming another thing customers have to learn.
The bank also plans to license the infrastructure to other banks through Monument Technology if the model works.
That puts the real test somewhere beyond transaction volume. Major banks have already shown that they can put money on blockchain infrastructure. The unanswered question is whether they can turn that infrastructure into something ordinary customers can actually use without giving up the privacy, regulation and trust associated with a bank deposit.
For now, the biggest tokenization projects are still largely talking to institutions.
Monument wants to see whether the conversation can finally reach everyone else.