Tokenized Deposits · Part One of Four

Tokenization in Production: Three Unsolved Risk Problems

C. Erik Larson · September 25, 2026

Tokenization is crossing into production this year, and it is worth being precise about what is arriving, because three different things are often described as one.

There are toolkits: IBM's Digital Asset Haven, now in on-premises beta with an adapter carrying tokenized deposit instructions into Swift's shared ledger. There are venues: Cari bringing tokenized deposits to mid-market banks, JPMorgan's Kinexys, DTCC taking tokenized securities through live production trades, Ondo in tokenized Treasuries. And now there are chartered issuers: Circle holds a national trust charter, with Ripple, Paxos and Fidelity in the queue.

The infrastructure is arriving. But my experience, developed at both the OCC and Promontory, makes me worry that the risk management around it is not keeping pace. Three problems are unsolved, and none of them is a coding problem:

  1. Continuous settlement on-chain paired with fiat settlement once a business day is deferred net settlement, and we need the net debit caps, collateral and loss-allocation rules that such structures have always required. It also changes what intraday liquidity monitoring has to measure, and how counterparty exposures are capitalized.
  2. Transaction monitoring systems were built around accounts and a settlement day. Several networks are permissioned — whitelisted wallets, KYC at the participating bank — which mitigates risk considerably. But onboarding controls and behavioral controls catch different things, and every bank runs both. Monitoring on-chain means new rules over new data with no alert history to calibrate against, and these systems are models that will need validation against a benchmark that does not yet exist.
  3. And there will be more than one network. Non-fungible tokens across venues mean separate pre-funding, separate positions, and no netting across any of them.

I am going to offer more on each of these over the coming weeks.

← Back to Thought Leadership