Deposits Without Law: Completing the Legal Architecture of Tokenized Deposits

Abstract

Tokenized deposits—commercial bank deposits represented as transferable digital tokens on distributed ledgers—are no longer hypothetical. Major U.S. banking institutions are deploying them at institutional scale, but the legal framework governing them has not kept pace. The GENIUS Act of 2025 recognizes that tokenized deposits are bank deposits governed by banking law rather than by the Act’s stablecoin framework. Yet tokenized deposits differ from conventional deposits in important respects: they are programmable, can settle atomically on distributed ledgers, and may be transferred by artificial intelligence agents acting without contemporaneous human intervention. The existing legal framework, including the Electronic Fund Transfer Act (EFTA), UCC Article 4A, and the FDIC’s resolution architecture, was not designed for these features. This Article identifies three consequential gaps in that framework and proposes targeted reforms to address them. First, the EFTA’s authorization framework does not clearly address smart-contract-governed transfers or AI-agent-initiated payments, leaving liability allocation uncertain. Second, Article 4A’s acceptance-based finality regime does not map cleanly onto on-chain settlement, creating uncertainty regarding payment finality, discharge, and error allocation. Third, smart-contract execution creates novel challenges for FDIC receivership, including asset transfers that continue after a bank’s failure. For each gap, the Article proposes reforms directed to the appropriate actor: congressional amendments to the EFTA, Uniform Law Commission amendments to UCC Articles 4A and 3, and FDIC rulemaking addressing resolution and recordkeeping, including a shadow ledger mandate and a regulatory kill switch for permissioned networks. Together, these reforms adapt existing law to govern a new mode of payment without displacing the banking framework that makes it trustworthy.