Major banks are turning to the Ethereum blockchain for projects involving tokenized deposits and cross-border payments, driven by a more favorable regulatory environment. Institutions like JPMorgan Chase, Citi and Custodia Bank have developed applications on Ethereum and its Layer-2 networks. This resurgence follows earlier efforts in the 2010s that largely stalled due to technical and investment challenges.
In the mid-2010s, several large banks explored Ethereum for financial applications. JPMorgan Chase developed the Quorum protocol in 2016 to facilitate interbank payments, later selling it to Consensys in 2020. That same year, the Enterprise Ethereum Alliance formed, including JPMorgan Chase, Banco Santander, BNY, BBVA, Credit Suisse and UBS, eventually growing to 200 members. The platform appealed for its potential to provide efficiency, immutable records and real-time visibility in transactions like supply chains or international payments, using smart contracts on a decentralized blockchain with ether as its native cryptocurrency.
These initiatives faded amid leadership changes, bank rivalries, scaling problems and unclear returns on investment. Interest revived after President Donald Trump's inauguration and congressional actions, including the GENIUS Act passed last July to regulate stablecoins, with another bill under consideration for cryptocurrency market standards.
Today, over 30 banks, such as Bank of America, Citi, TD Bank Group and Wells Fargo, partner with SWIFT on an Ethereum-based platform for cross-border transactions. JPMorgan Chase enables institutional clients to use its JPMCoin tokenized deposit on Base, an Ethereum Layer-2 network from Coinbase. Citi, Vantage Bank and Custodia Bank issue tokenized U.S. dollar deposits on Ethereum.
Bis Chatterjee, global head of partnerships and innovation at Citi, described the technology as "very, very standard, very, very resilient," noting its private operation and potential for integration. Caitlin Long, founder and CEO of Custodia Bank, highlighted Ethereum's battle-tested smart contracts and decentralization, saying, "The degree of decentralization in the blockchain network is also a critical criterion."
Last week, the Texas Bankers Association endorsed the Vantage-Custodia tokenized deposit platform, where stablecoins originate as bank-initiated tokenized deposits. Long added, "We are rolling it out step-by-step and deliberately, as banks must do."
While alternatives like Solana exist—with its capacity for over 65,000 transactions per second and use in Visa settlements via USDC—Ethereum remains the preferred choice for many. Paul Brody, global blockchain leader at EY and chairman of the Enterprise Ethereum Alliance, attributed this to Layer-2 benefits, stating, "Ethereum has a ton of momentum." Franklin Bi, a former Quorum developer now at Pantera Capital, noted Ethereum's appeal stemmed from engineers' personal experimentation, evolving from failed Bitcoin attempts in 2015 to more expressive smart contract capabilities.
