Tokenized deposits could drain $580 billion from U.S. bank lending and nobody in crypto is talking about it

A research paper published this week quantifies what happens when bank deposits move at blockchain speed. The number is large enough to reshape how banks fund the economy, and the crypto industry is building the pipes without acknowledging the consequences. Summary A research paper published on August 25 found that tokenized deposits could reduce U.S. bank lending capacity by $580 billion if the technology reaches widespread adoption, roughly 5% of total bank lending. The mechanism is straightforward: banks lend against stable deposits, and if deposits can move on chain in minutes instead of days, the deposit base becomes less stable, forcing banks to hold more liquid reserves and lend less. LayerZero and Keeta launched tokenized bank deposits across Ethereum, Solana, Base, and Keeta in July 2026, covering nine fiat currencies and making the theoretical risk operationally real. The Bank of England endorsed tokenized deposits as belonging in UK payments infrastructure, and South Korea began trialing them for government spending, indicating that adoption pressure is coming from regulators, not just startups. The $580 billion figure assumes a moderate adoption scenario. The paper’s hi...