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Beginner's guide

What are tokenized deposits?

A plain-English guide to the bank-issued digital dollar, and why banks like SoFi, J.P. Morgan, Citi, and HSBC are building them.

Updated October 25, 2026 · 7-minute read
In this guide
  1. The short answer
  2. How they work
  3. Are they FDIC insured?
  4. Tokenized deposits vs. stablecoins
  5. Who offers them today
  6. Risks and fine print
  7. Sources

The short answer

A tokenized deposit is money in a bank account that is represented as a digital token on a blockchain. One token equals one dollar on deposit. The bank still holds your money and still owes it to you. The blockchain just changes how the balance is recorded and moved.

SoFi describes each SOFIE token as representing $1 held on deposit at SoFi Bank. That's the core idea behind every tokenized deposit.

How they work

  1. You deposit dollars at a bank, as usual.
  2. The bank issues tokens that represent that balance, 1:1, to a wallet the bank controls or approves.
  3. Tokens move between approved wallets, often in seconds and at any hour, on a private bank blockchain (Citi, HSBC) or a public one (J.P. Morgan's JPM Coin runs on Base and Ethereum).
  4. You redeem the tokens back into a normal balance whenever you like.

For businesses, the big draw is 24/7 settlement. A corporate treasurer can move cash between subsidiaries on a Sunday night. For consumers, the first use is simpler. With SoFi Earn, money waiting to be spent on crypto can earn interest at a bank instead of sitting idle.

Are tokenized deposits FDIC insured?

A tokenized deposit can be FDIC insured if it is a real deposit at an FDIC-insured bank. In April 2026 the FDIC proposed a rule stating that the legal definition of a deposit is "technology neutral," meaning a deposit doesn't stop being a deposit because it's recorded on a blockchain. To be a deposit, the token still has to meet the legal definition.

  • The standard limit is $250,000 per depositor, per insured bank, per ownership category.
  • The limit is shared with your other deposits at the same bank. SoFi says SOFIE shares the limit with your individual SoFi Checking and Savings balances.
  • Insurance protects you if the bank fails. It does not protect against scams, hacked wallets, or sending tokens to the wrong address.
  • Once you convert a tokenized deposit into a stablecoin or crypto, that money is no longer an insured deposit. For example, SoFi says SoFiUSD and other digital assets are not FDIC insured.
Always read the bank's own account agreement. Insurance depends on the specific product, the bank, and how the account is titled.

Tokenized deposits vs. stablecoins

Both are "digital dollars" that move on blockchains, but they're legally different.

  • Issuer: a tokenized deposit is issued by a bank. A payment stablecoin is issued by a permitted stablecoin issuer.
  • Interest: banks can pay interest on deposits. The GENIUS Act bars stablecoin issuers from paying holders interest or yield just for holding the coin. The "rewards" some exchanges offer on stablecoins come from the platform and aren't bank interest.
  • Insurance: tokenized deposits can be FDIC insured. Payment stablecoins aren't.
  • The law: the GENIUS Act defines "payment stablecoin" to exclude bank deposits, including deposits recorded on a blockchain. More on the GENIUS Act →

Who offers them today

  • SoFi Earn (SOFIE): launched October 22, 2026 for consumers, at a 4.40% variable APY as of October 20, 2026. It's rolling out to SoFi Crypto members through November.
  • JPM Coin (JPMD), J.P. Morgan / Kinexys: for institutional clients on Base since November 2025 and on Ethereum since October 19, 2026.
  • Citi Token Services: for corporate and institutional clients in seven markets, including the US, as of September 2026.
  • HSBC Tokenized Deposit Service: launched in the US April 13, 2026 for eligible corporate and institutional clients, and in the UAE in June 2026.
  • Avit, Custodia & Vantage Bank (Hazel Network): a token that works as a tokenized deposit between member banks and is designed as a stablecoin outside that group.

Compare rates and sources

Risks and fine print

  • Rates are variable and can drop at any time.
  • Access is limited. Most products are institution-only for now.
  • Technology risk: wallets, smart contracts, and blockchains can have outages or bugs.
  • Conversion risk: once a tokenized deposit is turned into a stablecoin or crypto, it loses deposit protections.
  • New rules: regulators are still finalizing rules, so terms may change.

Sources