The Banking System Goes Public: How Institutional Finance Moved On-Chain in 2025

When Wall Street Met Blockchain: The Shift That Changed Everything

For decades, one asset remained stubbornly offline: commercial bank deposits. While cryptocurrencies experimented with digital money and real-world assets gradually tokenized everything from government bonds to corporate debt, traditional bank deposits—the lifeblood of the global financial system—stayed locked behind closed banking doors. That changed decisively in December 2025.

JPMorgan Chase took a watershed step by moving its JPM Coin (JPMD) from internal testing into live operations on Base, an Ethereum Layer 2 network operated by Coinbase. But this wasn’t just another blockchain pilot. For the first time, actual bank deposits from a systemically important institution were settling transactions, clearing collateral, and processing payments on a public blockchain network 24/7. Mastercard, Coinbase, and B2C2 became the first institutional participants in these live transactions, marking a fundamental shift in how banking infrastructure could function.

Deposit Tokens Aren’t Just Better Stablecoins—They’re Something Entirely Different

The distinction matters more than it might appear. Stablecoins have dominated on-chain cash for years, but they exist as products external to the traditional banking system. Their issuers occupy an ambiguous regulatory space, operate with varying reserve transparency standards, and exist largely outside conventional audit frameworks.

Deposit tokens solve this differently. They’re not new financial innovations—they’re bank deposits, period. When you hold JPMD, you hold a direct claim on JPMorgan’s balance sheet, embedded within existing regulatory structures, accounting standards, and auditing requirements. The institution backing it faces the same disclosure obligations and regulatory scrutiny as its traditional banking operations.

The numbers underscore the difference: as of December 31, 2024, JPMorgan held $2.406 trillion in total deposits. Even if only a fraction of that deposit base moves to blockchain settlement infrastructure, it would dwarf the entire current on-chain RWA market. Tokenized government bonds and money market funds have grown impressively, but they operate in the tens-of-billions range. Commercial bank deposits operate in the trillions.

The Yield Problem Gets Solved

If deposit tokens handled settlement efficiency, JPMorgan addressed the complementary problem on December 15, 2025: the lack of yield-bearing assets suitable for on-chain institutional use.

JPMorgan Asset Management launched MONY—My OnChain Net Yield Fund—as a fully compliant, yield-generating solution directly on the public Ethereum blockchain. The structure is elegant: a 506© private fund restricted to accredited investors, with all assets allocated to U.S. Treasury securities and Treasury-backed repurchase agreements. JPMorgan committed $100 million of its own capital to launch the fund, allowing institutional participants to access dollar-denominated yield characteristics natively on-chain within a complete regulatory framework.

MONY represents something subtly but importantly different from previous tokenized fixed-income products. It’s not an experiment or a proof-of-concept—it’s a production-grade asset management product that happens to live on a public blockchain, available to the same accredited investor base that would traditionally hold such funds in conventional accounts.

The Infrastructure Is Here: Data Confirms the Transition

Quantitative metrics reveal that on-chain RWA has transitioned from exploration phase to operational reality. According to RWA.xyz, as of December 25, 2025, distributed on-chain RWA assets totaled $19.1 billion in value, with an underlying asset pool of $414.66 billion serving 592,638 asset holders.

More specifically, in the government debt category—the closest equivalent to on-chain cash management—tokenized government bonds comprised $9 billion in on-chain value across 62 distinct assets, held by 59,214 participants. These assets were generating a 3.82% annualized yield, providing functional capabilities comparable to traditional treasury-focused cash management vehicles.

The Macroeconomic Tailwind

Understanding why these products emerged in 2025 specifically requires looking at the broader banking environment. Federal Reserve H.8 data as of December 10, 2025, showed U.S. commercial banks held $18.5185793 trillion in total deposits. Within an operating environment of that scale, any technological pathway offering settlement efficiency gains, round-the-clock operational capability, and enhanced collateral reuse rates naturally becomes attractive to institutional treasury operations.

This isn’t primarily about blockchain enthusiasm—it’s about practical efficiency within an existing system dealing with massive capital flows, complex collateral management, and increasing demands for continuous operations across global time zones.

Building Institutional Finance’s Public-Blockchain Layer

When JPMD and MONY are viewed together, they reveal something beyond individual product launches: a coherent institutional-grade on-chain financial ecosystem is materializing.

Deposit tokens like JPMD create a 24/7 on-chain cash layer capable of genuine settlement. Tokenized money market funds like MONY supply compliant, low-risk yield-bearing assets within that same environment. An expanding network of tokenized government bonds provides collateral and liquidity infrastructure. The three components form an integrated system that institutional treasury teams could theoretically operate entirely on-chain.

Between November and December 2025, this bundle of developments crystallized an important transition: real-world assets were no longer just “things that could theoretically be tokenized.” They were becoming operational components of financial infrastructure capable of functioning continuously on a public blockchain, gradually integrating into institutional clearing logic, cash management operations, and asset allocation frameworks that had previously existed entirely offline.

The boundary between traditional finance and blockchain infrastructure had fundamentally shifted.