A research paper published on August 25, 2026 estimated that widespread tokenized deposits could reduce U.S. bank lending capacity by $580 billion, about 5 percent of total bank lending. The paper explained that banks rely on deposit stability to make loans, and that tokenized deposits settle on blockchain networks in seconds, which is faster than traditional ACH or wire transfers. It modeled three adoption scenarios. In the low‑adoption case, tokenized deposits would represent 5 % to 10 % of total deposits and reduce lending capacity by roughly $120 billion. The moderate scenario, covering 15 % to 25 % of deposits, corresponds to a $580 billion reduction, equal to the total outstanding balance of U.S. auto loans. The high‑adoption scenario, with 35 % to 50 % of deposits, projects a $1.2 trillion decline, which could force banks to use wholesale funding, securitization, or Federal Home Loan Bank advances and raise mortgage rates by 15 to 30 basis points and small‑business loan rates by 25 to 50 basis points. LayerZero and Keeta launched tokenized deposit services across Ethereum, Solana, Base and other chains in July 2026, supporting nine fiat currencies. Their revenue models depend on transaction fees, creating an incentive to expand usage without accounting for systemic effects on bank funding. The Bank of England has endorsed tokenized deposits as part of the United Kingdom’s payments infrastructure, and South Korea is piloting the technology for government spending. The GENIUS Act’s stablecoin framework also recognizes the underlying technology, creating regulatory pressure that may accelerate adoption. If tokenized deposits reach the moderate adoption level, the Federal Reserve could revise liquidity coverage ratio requirements, assign higher outflow rates to tokenized deposits, or impose speed limits on withdrawals, measures that would reduce the speed advantage but increase banks’ required liquid assets. A central bank digital currency or expanded FedNow system could provide a government‑controlled alternative that preserves speed while keeping risk within public oversight. The projection could be invalidated if tokenized deposits implement voluntary settlement delays, if banks develop loan products that adjust to short‑term deposit bases, or if adoption remains below 10 % of total deposits, limiting impact to the low‑adoption range. Key indicators to monitor include transaction volume on LayerZero and Keeta platforms, Federal Reserve statements on deposit stability, Basel Committee updates to capital rules, changes in bank deposit rates, and timelines for central bank digital currency rollouts. While the $580 billion estimate is not immediately catastrophic, it signals a potential shift in credit availability for small businesses and first‑time homebuyers that could influence monetary policy and financial stability over the next few years.