A practical guide to the digital assets banks are actually using — from JPM Coin and deposit tokens to stablecoins and wholesale CBDCs. Learn what banks are doing, how to evaluate these assets, and what to avoid.
When people ask "what cryptocurrency do banks use," the answer is more nuanced than a simple list of ticker symbols. Banks are not typically using Bitcoin or Ethereum as reserves. Instead, they are focused on a different category of digital assets: permissioned tokens, stablecoins, and central bank digital currencies (CBDCs).
The key distinction is between public, permissionless blockchains (Bitcoin, Ethereum, etc.) and private, permissioned networks that are controlled by a consortium or a single institution. Banks are overwhelmingly interested in the latter for operational use, while they may offer public crypto services (custody, trading) to clients.
Banks use digital assets for settlement, payments, and liquidity — not as speculative investments. The assets they use are typically collateralized, regulated, and operate on permissioned blockchains.
Here are the main categories of digital assets that banks are actually using today:
JPM Coin is one of the most prominent examples of a bank-issued digital asset. Launched in 2019, it is a permissioned token that represents US dollars held on deposit at JPMorgan. It operates on JPMorgan's private blockchain platform (Onyx) and is used for wholesale payments between institutional clients.
JPM Coin is backed 1:1 by US dollars and is only available to JPMorgan's institutional clients — not retail customers. It is designed to enable instantaneous, 24/7 settlement of cross-border payments and securities transactions.
Signet was a blockchain-based payment system operated by Signature Bank (which was later acquired). It allowed commercial clients to make real-time payments in US dollars using a private blockchain. This is another example of a bank-issued digital asset used for institutional settlement.
Several major banks are exploring tokenized deposits — commercial bank money that is represented on a distributed ledger. The Regulated Liability Network (RLN) is a notable initiative where multiple banks collaborate to create a shared settlement layer for tokenized deposits. This is seen as a next-generation infrastructure for interbank payments.
Bank-issued digital assets are not cryptocurrencies in the traditional sense — they are digital representations of fiat currency on a private, permissioned ledger. They are designed for speed, efficiency, and compliance, not for speculation.
USDC (USD Coin) is the most widely used stablecoin in institutional finance. It is issued by Circle and is fully backed by US dollar reserves, held in regulated financial institutions. USDC is permissionless (anyone can hold and transfer it) and operates on multiple blockchains (Ethereum, Solana, etc.).
Banks use USDC for settlement, liquidity management, and as a bridge currency in crypto trading. Many major banks have partnered with Circle to integrate USDC into their payment infrastructure.
USDP (formerly Paxos Standard) is another regulated stablecoin issued by Paxos. It is fully backed by US dollars held in segregated accounts and is regularly audited. USDP is used by banks and financial institutions for settlement and treasury management.
While USDT is the largest stablecoin by market cap, its use in banking is more limited due to regulatory concerns and questions about its reserve backing. Some banks and institutional platforms accept USDT, but many are cautious. USDT is not generally used as a primary settlement token by regulated banks.
Not all stablecoins are equal. Banks prefer stablecoins that are regulated, audited, and backed by transparent reserves. Always verify the issuer's regulatory status and reserve attestations.
Central Bank Digital Currencies (CBDCs) are digital forms of fiat currency issued by a central bank. They are distinct from cryptocurrencies because they are centralized, legal tender, and backed by the central bank.
Project mBridge is a notable multi-CBDC initiative led by the Bank for International Settlements (BIS) Innovation Hub, in collaboration with the central banks of China, Hong Kong, Thailand, and the UAE. It aims to create a platform for cross-border payments using wholesale CBDCs.
Other central banks — including the European Central Bank (digital euro), the Bank of England (Britcoin), and the People's Bank of China (digital yuan) — are also exploring CBDCs. Commercial banks are involved in these initiatives as participants and testers.
Importantly: As of 2026, most CBDC projects are still in pilot phases. No major economy has fully launched a retail CBDC, though several have launched wholesale CBDC pilots.
Generally, no. Most traditional banks do not hold Bitcoin or Ethereum on their balance sheets due to regulatory, prudential, and capital requirements. The Basel Committee on Banking Supervision (BCBS) has proposed a conservative risk weighting of up to 1,250% for unbacked crypto assets, making it prohibitively expensive for banks to hold them as reserves.
However, banks do offer custody, trading, and investment services for Bitcoin and Ethereum through subsidiaries or partnerships. For example, banks like BNY Mellon and Fidelity offer crypto custody services to institutional clients.
Banks' use of public cryptocurrencies is very different from banks' services for public cryptocurrencies. Banks use stablecoins and deposit tokens for settlement; they do not typically use Bitcoin or Ethereum for their own operations.
If you are considering engaging with any digital asset that is associated with a bank or financial institution, here is a practical evaluation framework:
Who issues the token? Is it a regulated bank, a registered money transmitter, or a central bank? The issuer's regulatory status is the single most important factor in assessing risk.
Is the token fully collateralized? Are the reserves held in segregated accounts? Are they audited by a third-party firm? Look for monthly or quarterly attestations from reputable auditors.
Is the token on a permissioned or permissionless blockchain? Who controls the network? Permissioned networks (like JPMorgan's Onyx) are more controlled but also more compliant. Permissionless networks (like USDC on Ethereum) offer more openness but also more risk.
Does the token comply with relevant regulations (e.g., KYC/AML, sanctions, securities laws)? Is the issuer registered with financial regulators?
What is the token actually used for? Is it designed for settlement, payments, or something else? The use case will inform the token's risk profile and its future viability.
If a token claims to be "bank-backed" but you cannot verify the backing through independent audits or the bank's official statements, it is likely a red flag. Always cross-check with official sources.
Use this table to compare different types of digital assets that banks use or interact with.
| Asset Type | Examples | Issuer | Permissioned? | Backing | Bank Use | Risk Level |
|---|---|---|---|---|---|---|
| Deposit Token | JPM Coin | JPMorgan | Yes (private) | 1:1 USD | Wholesale settlement | Low |
| Stablecoin | USDC, USDP | Circle, Paxos | No (public) | 1:1 USD | Settlement, treasury | Medium |
| Stablecoin | USDT | Tether | No (public) | Reserve claims (opaque) | Limited | Higher |
| Wholesale CBDC | mBridge, digital euro (wholesale) | Central bank | Yes (permissioned) | Central bank | Interbank settlement | Low |
| Public Crypto | Bitcoin, Ethereum | None | No (public) | None (market-based) | Services, not balance sheet | High |
| Tokenized Deposit | RLN, various pilots | Multiple banks | Yes (permissioned) | 1:1 bank deposits | Interbank settlement | Low |
Risk levels are general indicators and can vary based on specific implementation and jurisdiction. Always verify current details from official sources.
Sarah is the treasurer of a medium-sized financial firm that frequently makes cross-border payments. Her bank offers her the ability to use a "bank-backed settlement token" for faster international transfers.
Sarah's evaluation process:
Decision: Sarah decides to use the token for cross-border payments, as it offers faster settlement at a lower cost than traditional methods, with an acceptable level of risk.
Key takeaway: Bank-backed tokens can offer real operational benefits, but they require thorough due diligence just like any other financial product.
Digital assets, including bank-backed tokens, carry risk. While bank-issued deposit tokens and wholesale CBDCs are generally lower risk than public cryptocurrencies, they are not without risk.
Key risks include:
This article is for educational and informational purposes only. It does not constitute financial, legal, or tax advice. You should conduct your own research and consult with qualified professionals before making any decisions. Never invest more than you can afford to lose.
Always verify current prices, fees, rules, and platform availability on official sources, as these details can change without notice.
Banks primarily use permissioned digital assets and stablecoins. Examples include JPM Coin (JPMorgan), USDC (Circle), and various wholesale CBDCs being tested by central banks. Most traditional banks do not hold Bitcoin or Ethereum as reserves, though some offer custody or trading services for clients.
Most traditional banks do not hold Bitcoin or Ethereum on their balance sheets due to regulatory and prudential concerns. However, some banks offer custody services, trading, or investment products for clients. A few banks have made small proprietary investments, but this is not the norm.
JPM Coin is a permissioned digital token issued by JPMorgan, used primarily for wholesale payments between institutional clients. It is backed 1:1 by US dollars held at JPMorgan and operates on the bank's private blockchain. It is not available to retail customers.
Yes, many banks are integrating with stablecoins like USDC for settlement and payment services. Circle's USDC is widely used in institutional crypto trading. Banks also use stablecoins for cross-border payments and liquidity management. USDT is used less frequently by regulated banks due to transparency concerns.
Wholesale CBDCs are digital currencies issued by central banks for use between financial institutions — for interbank settlements and securities transactions. Retail CBDCs are intended for use by the general public. Most bank involvement is focused on wholesale CBDCs.
Banks evaluate crypto assets based on market risk, credit risk, operational risk, and regulatory compliance. They consider volatility, liquidity, custody arrangements, and the legal status of the asset. Most banks apply conservative risk weightings to digital assets, as per Basel Committee guidelines.
Some banks offer cryptocurrency trading or custody services through partnerships with regulated exchanges or custodians. However, many banks do not offer direct crypto purchases. Always check with your specific bank and be aware of any fees or restrictions.
Bank-backed digital assets (like JPM Coin or deposit tokens) are generally considered lower-risk because they are fully collateralized and backed by regulated institutions. However, they are not risk-free. Counterparty risk, operational risk, and regulatory changes can still affect them. Always assess the specific details of the asset and issuer.