Bank of America Warns Banks Must Prepare for Onchain Finance Shift

Crypto policy in the United States is shifting from theory to execution as banking regulators begin drawing clear boundaries around stablecoins and tokenized deposits, according to a new Bank of America report released Monday. 

Analysts led by Ebrahim Poonawala said recent actions by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve signal the start of a multi-year transition that could move more payments and real-world assets on-chain within the regulated financial system.

The report argues that regulators are no longer debating whether crypto-based financial infrastructure belongs inside the banking system, but instead are focusing on how it should be structured, supervised, and scaled.

Regulators Begin Defining the Stablecoin Perimeter

A central development highlighted in the Bank of America report is the OCC’s recent conditional approval of national trust bank charters for five digital-asset firms. 

The central bank described the move as a meaningful step toward federal acceptance of stablecoins and crypto custody, even if the approvals remain narrow in scope.

Under the charters, digital-asset activity can be conducted within the banking system as a fiduciary service, provided firms meet strict requirements around liquidity, compliance, and risk management. 

The analysts said that approach creates a controlled entry point for crypto activities, allowing regulators to test oversight frameworks without fully opening the door to unrestricted stablecoin issuance.

FDIC Rules Signal a Longer-Term Transition

The report also pointed to imminent action from the FDIC, which is expected to release a notice of proposed rulemaking detailing how payment stablecoins issued by subsidiaries of FDIC-supervised banks could be approved. These rules are mandated under the GENIUS Act and must be finalized by July 2026, with implementation scheduled for January 2027.

Bank of America said the extended timeline signals that stablecoin regulation will unfold gradually rather than through abrupt policy shifts. The approach suggests regulators are prioritizing financial stability and consumer protection while giving banks and issuers time to adapt their operating models.

Federal Reserve Coordination and Global Parallels

Federal Reserve officials have also indicated closer coordination with other banking regulators on capital, liquidity, and diversification standards for stablecoin issuers, as required by the GENIUS Act. Bank of America linked this effort to a broader international push to bring stablecoins under bank-style supervision.

The report cited a recent Bank of England proposal outlining a regulatory regime for sterling-denominated systemic stablecoins, including asset-holding requirements and caps on exposures. 

Together, those efforts suggest a convergence between U.S. and global regulators on how stablecoins should be treated once they reach systemic scale.

Tokenized Deposits Versus Stablecoins

On the market-structure side, Bank of America highlighted work by JPMorgan and Singapore-based DBS to develop an interoperable framework for tokenized value transfer across both public and permissioned blockchains. The initiative builds on JPMorgan’s JPMD tokenized deposit project and reflects a growing debate over whether tokenized deposits could offer a more robust alternative to stablecoins.

Also read: Stablecoins Quietly Transform the Global Economy, Says a16z

The analysts noted that tokenized deposits remain on bank balance sheets and fall squarely within existing regulatory frameworks, unlike many stablecoins that sit outside traditional deposit insurance regimes. 

That distinction could become increasingly important as regulators weigh how different forms of digital money interact with the banking system.

Preparing for an On-Chain Financial System

Looking ahead, Bank of America outlined a scenario in which bonds, equities, money-market funds, and cross-border payments increasingly migrate on-chain, supported by clearer rules and institutional-grade infrastructure. 

The report said regulatory clarity is now aligning with technological readiness, making large-scale adoption more plausible than in previous cycles.

To remain competitive, banks will need more than a basic understanding of blockchain technology. The analysts concluded that institutions must be willing to experiment with tokenized assets and on-chain settlement models, as the transition from discussion to implementation in crypto policy is already underway.