Banks are quietly building tokenization pilots, Kresus executive says

From the outside, banks look slow on blockchain. Inside the vendors they are hiring, Dr. Jordan Knecht says, the picture is different: institutions are running requests for proposals, testing tokenized certificates of deposit and lining up infrastructure for the day regulators finish the rules.

Knecht is Head of Strategic Integrations at Kresus Labs, which sells wallet infrastructure, enterprise tokenization and stablecoin workflows to banks, funds and asset managers. He spoke with Ashton Addison for Crypto Coin Show in an interview recorded Thursday, October 1, and the full conversation is on YouTube. The company has a commercial interest in institutions moving, so his claims are best read as a vendor’s view of its own pipeline. The specifics he offered are what make them worth reporting.

The pilotsTokenized deposits are already in pilot in friendlier jurisdictions

Knecht named the United Arab Emirates and El Salvador as the markets where banks have the most room to experiment. The company is working with several institutions there, which he declined to identify, on tokenized certificates of deposit. He described the work as actively being deployed.

The incentives line up on both sides, he said. Some jurisdictions treat tokenized assets as tax-free, which gives customers a reason to hold the token and then move it, post it as collateral, sell it or borrow against it. For the bank, the same product improves treasury efficiency and serves as a proving ground for other instruments it might tokenize later.

US banks are mostly watching. Knecht said some are waiting to see how regulators in those markets respond, while others run an offshore entity to build pilots they can later show to American lawmakers. He pointed to JPMorgan’s launch of tokenized deposits as evidence that the idea has reached the largest US banks. Tokenized deposits differ from stablecoins, he noted, because they are backed by the bank’s own collateral rather than by a third party.

The bottleneckLiquidity decides which assets belong onchain

Some clients arrive convinced that tokenizing an asset will make it more efficient on its own. Knecht pushes back. A municipal bond put onchain would trade around the clock, he said, but that does not mean anyone wants to buy it in the middle of the night.

He described a real estate client that Kresus had to turn away until roughly two months ago, because nobody would provide liquidity for the asset. That changed when an institution with a large balance sheet said it wanted to be the sole buyer, with capacity for what he put at probably several billion dollars of property. He did not name the buyer. Addison noted that liquidity has been the sticking point in security token discussions since at least 2018, and he said the buyers now appearing are interested in supporting around-the-clock interoperability, though not yet the depth the market needs.

Equities come first in his view, because that is where most of the tokenization market is concentrated. He read DTCC’s public posture as a pivot toward corporate treasuries as tokenized equities draw liquidity, and framed it as his interpretation rather than a stated DTCC plan. Insurance contracts and annuities would follow. The infrastructure that matters over the long run, he argued, is the plumbing that lets collateral back tokenized assets and lets trades swap and settle atomically. Round-the-clock trading is the visible feature, and the plumbing is the lasting one.

The rulesStablecoins are still a talking point at US banks, not a deployment

Asked whether banks use stablecoins for payments and settlement yet, Knecht said the market is in a crawl-before-walk phase. Banks are discussing and experimenting, he said, but the company is not seeing anyone deploy them yet. He expects tokenized deposits to be the next step, and he rejected the framing that stablecoins and bank deposits are rivals. They solve different problems, he said.

He tied the pace to regulation. The GENIUS Act, passed last year, gave US banks enough rules to begin experimenting with stablecoins, he said, while the CLARITY Act has been tabled. He compared the process with securities law, which he said took three acts and more than a decade to settle.

On whether crypto exchanges or banks will win customers, he said neither will beat the other and that the two will converge into “just finance.” His example was a Friday 8 p.m. loan closing. A buyer holding $100,000 in USDC on an exchange cannot move it into a bank account until the wire is processed Monday morning. Banks have long used that convenience gap against higher-yield online competitors, and they can make the same argument against stablecoin balances.

The playbookInstitutions should define the problem before picking a chain

Knecht said prospects often open by announcing they have already chosen a layer one blockchain. He advises against it. Institutions should first define the asset, who holds it, what rights attach to it and what transfer restrictions apply, and then let the infrastructure partner select the network. For a privacy-specific use case he would point to Canton, and to an EVM-based chain where deep liquidity matters more.

He compared the approach to a company hiring a vendor to improve video streaming, where the customer never specifies the protocol. The company starts with a small MVP that he said can go live in about 90 days, then builds toward production. He added that his team is made up of former traditional finance professionals who know the constraints banks work under.

The BlockWest read. We read Knecht’s timeline as a warning to allocators and bank treasurers: pilots are already live in friendlier jurisdictions, and an 18 to 24 month internal build means a decision made after clarity arrives is a decision made late. The weak point is liquidity. Until buyers of size appear beyond equities, tokenization will keep outrunning demand. Kresus sells this infrastructure, so weigh the urgency accordingly.

What to watchThe CLARITY Act and a first named bank deployment are the tests

Two developments would test Knecht’s account. One is whether the tabled CLARITY Act advances, since he links the pace of US bank adoption to regulatory clarity. The other is a named bank moving a tokenized certificate of deposit from pilot to production in the UAE or El Salvador. He said such a project is under way but gave no institution and no launch date.

For now, the evidence is one executive’s account of a pipeline he cannot name. If he is right, the next headlines will come from banks that never announced the build.