Banking’s Choice for On‑Chain Finance: Stablecoins, Tokenized Deposits, and Hybrid Blockchain Architecture

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3-Point Summary

  • Twenty‑one global megabanks are jointly issuing a USD stablecoin, marking the formal entry of traditional finance into Web3.
  • Bank‑issued stablecoins and tokenized deposits form a dual monetary structure—internal banking rails vs external digital dollar settlement.
  • U.S.–EU regulation and the Besu + Ethereum hybrid architecture enable banks to build a compliant, scalable, on‑chain financial infrastructure.
Global Banks Entering On‑Chain Finance

Twenty‑one global banks issuing a USD stablecoin signals a historic shift: traditional finance is no longer observing Web3 from the outside—it is becoming part of its core infrastructure.

※ This article is published in its current version and will be updated to the final Daily Crypto Time (DCT) format in two days.

🏦 The Entry of 21 Global Banks into Stablecoins: Why Institutions That Once Called Crypto a ‘Scam’ Are Now Issuing Digital Dollars

— Tokenized Deposits, Regulation, and the Major Shift as Traditional Finance Enters Web3

In 2027, the announcement that 21 global megabanks—including Bank of America, Citi, Goldman Sachs, Deutsche Bank, UBS, and Wells Fargo—would jointly issue a USD stablecoin sent shockwaves through the financial industry. Just a few years ago, these same institutions dismissed crypto as a “scam,” yet now they are preparing to become core players in the digital dollar infrastructure.

This shift is not a mere technical experiment—it marks a historic turning point where traditional finance (TF) formally adopts Web3 infrastructure. Below, we break down this transformation across four key dimensions.

1) Why Banks That Once Called Crypto a ‘Scam’ Are Now Issuing Stablecoins

Banks criticized crypto for clear reasons: regulatory uncertainty, money‑laundering risks, volatile token markets, and the rise of decentralized finance (DeFi) that bypassed traditional banking rails. But between 2023 and 2026, a series of structural changes forced them to reconsider.

Stablecoins like USDT and USDC grew so rapidly that their daily settlement volume occasionally surpassed Visa. Stablecoins effectively became the digital version of global dollars—representing both a threat and an opportunity for banks, as parts of the dollar settlement market were shifting to non‑bank infrastructure.

As stablecoins entered regulatory frameworks, banks could no longer dismiss “all of crypto” wholesale. Instead, they began positioning themselves as the rightful issuers of regulated digital dollars.

2) What Happens to Tokenized Deposits When Banks Issue Their Own Stablecoins?

Bank‑issued on‑chain dollars fall into two major categories: tokenized deposits and reserve‑backed stablecoins. Although they appear similar, their structure and purpose differ significantly.

Tokenized deposits mirror traditional bank deposits on‑chain. They retain deposit insurance, are treated as bank liabilities, and remain tightly integrated with internal banking systems. Reserve‑backed stablecoins, however, are issued by a separate entity holding reserves and mint tokens against those reserves—functionally closer to a digital dollar than a deposit.

The USD stablecoin proposed by the 21 banks aligns with the latter model. It is not a tokenized deposit tied directly to internal banking systems but a reserve‑backed digital dollar optimized for global settlement. Thus, tokenized deposits and stablecoins are not competitors—they form a dual structure separating internal and external monetary rails.

Summary of the Relationship

  • Tokenized Deposits: On‑chain versions of internal bank deposits.
  • Reserve‑Backed Stablecoins: Digital dollars optimized for global settlement.
  • They are complementary: “internal use vs external use.”

3) The Significance of Banks Issuing Stablecoins Under U.S. and EU Regulation

Bank‑issued stablecoins differ fundamentally from USDT and USDC in terms of trust and regulatory compliance. The GENIUS Act in the U.S. and MiCA in Europe impose strict requirements on reserve composition, audits, disclosures, and risk management.

Banks already operate within these regulatory environments, enabling them to design stablecoins as fully compliant digital dollar instruments. Their reserves are likely to meet high‑quality asset requirements, deposit insurance frameworks, and banking‑grade oversight—dramatically increasing institutional trust.

This means bank‑issued stablecoins could form a new ecosystem of regulated digital dollars, distinct from crypto‑native stablecoins. Stablecoins would evolve from experimental assets into core components of institutional financial infrastructure.

Key Implications

  • Regulated stablecoins are far easier for institutions and regulators to adopt.
  • Banks can leverage existing regulatory frameworks to issue “legal digital dollars.”
  • This creates a traditional‑finance‑centric stablecoin ecosystem, separate from USDT/USDC.

4) The Hybrid Architecture Already Chosen by U.S. Banks: Besu Permissioned Execution Layer + Ethereum L1/L2 Settlement Layer

Issuing a stablecoin does not mean banks will run everything on public blockchains. U.S. banks have already chosen a hybrid architecture that balances internal control with global interoperability.

The execution layer is a permissioned Hyperledger Besu network. Only regulated institutions can participate, full KYC/AML is enforced, and the network supports high‑speed processing and privacy. Tokenized deposits, internal settlement, and asset tokenization all run on this Besu layer.

The settlement layer is Ethereum L1/L2. Global transfers, external interactions, and movement between exchanges and custodians occur on Ethereum. L1 provides finality and security, while L2 enables low‑cost, high‑speed settlement—allowing bank‑issued stablecoins to circulate worldwide.

Implications of the Hybrid Model

  • Besu Permissioned Network: Optimized for regulation, privacy, and internal control.
  • Ethereum L1/L2: Provides global liquidity and openness.
  • Bank stablecoins grow atop this hybrid architecture, becoming core on‑chain financial infrastructure.

Conclusion: Not Crypto’s Victory, but the Evolution of Financial Infrastructure

Banks are not embracing all of crypto—they are selectively adopting the parts that can be absorbed into financial infrastructure. Stablecoins are the clearest example. Regulated stablecoins become the settlement layer of digital dollars, while tokenized deposits become the on‑chain version of internal banking systems.

With U.S. and EU regulatory frameworks and the Besu+Ethereum hybrid architecture, traditional finance is increasingly shifting toward on‑chain infrastructure as the default. The 21‑bank USD stablecoin initiative is a symbolic milestone pointing toward this future.

  • Stablecoins are the digital dollar infrastructure chosen by traditional finance.
  • Tokenized deposits and stablecoins form a dual internal/external monetary structure.
  • The hybrid blockchain architecture is the real stage where bank stablecoins will operate.

After 2027, finance is unlikely to be a battlefield between traditional finance and Web3. Instead, it will be an era where both merge to create a new digital financial order.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

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