When a $3 Trillion Bank Puts Deposits on a Public Blockchain, It’s Time to Pay Attention

In June 2025, J.P. Morgan did something that would have been unthinkable five years ago. It took the US dollar deposit, which is the most foundational product in commercial banking, and put it on a public blockchain. The JPMD token, which is launched as a PoC on Coinbase’s Base chain, came from Kinexys, the platform that is already processing over US$2 billion in tokenized payments every single day.

J.P. Morgan is not alone. In September 2025, nine European banks formed a consortium to issue a euro-denominated stablecoin as a direct response to the dominance of US dollar digital currencies in global markets. China’s digital yuan had already crossed US$2.38 trillion in cumulative transaction volume. 

This is not a trend limited to the top ten global banks. The underlying shift affects every institution that moves money. Cambridge Centre for Alternative Finance rates this as an 8.1 grade priority for banks, which indicates high strategic focus and CEO level attention. 

Source: Cambridge Centre for Alternative Finance Report 2026

So, the question facing bank leadership today is which form of it to build on. There are three credible choices. 

This article breaks down all three.

What Is Tokenized Money?

Tokenized money is fiat-denominated money recorded and transferable on shared digital ledgers like blockchain. It is not a new form of value, though. It is a new form of representation. 

The underlying economic logic of money as a unit of account, medium of exchange, and store of value remains the same. What changes is how money is recorded, moved, and settled.

According to a February 2026 study by the Cambridge Centre for Alternative Finance (CCAF) and Financial Innovation for Impact (Fii), the total tokenized money market will exceed US$300 billion in 2025 across multiple instrument types. The study identified four broad categories of tokenized money instruments:

• Central bank digital money (CBDCs), issued by sovereign authorities.

• Commercial bank deposit claims, including tokenized deposits and deposit tokens issued by regulated banks.

• Prepaid fiat representations, commonly known as fiat-backed stablecoins such as USDT and USDC.

• Fiat-anchored asset positions, including tokenized money market funds and crypto-collateralised instruments.

For banks specifically, three of these categories give the most direct paths to participation: 

1. Bank-issued or bank-partnered stablecoins, 
2. CBDC distribution as intermediaries, and 
3. Tokenized deposits. 

Each path comes with distinct trade-offs in terms of regulatory treatment, technical architecture, balance-sheet impact, and the types of clients they serve best.

Let’s examine each one.

Stablecoins for Banks

A stablecoin is a digital token pegged to the value of a fiat currency, mostly the US dollar or euro, and backed by reserves of high-quality liquid assets such as cash, short-term government bonds, or money market instruments. 

Unlike traditional bank deposits, stablecoins sit outside a bank’s deposit liabilities. They function more like digital bearer instruments, which are transferable peer-to-peer, available 24/7, and operable across multiple blockchain networks.

For banks, the opportunity isn’t just to use existing stablecoins. They can issue them as well. A bank-issued or bank-consortium-issued stablecoin gives the institution direct participation in on-chain payment rails while maintaining the trust and regulatory credibility that comes with a banking license. 

1. How Stablecoins Work for Banks?

Stablecoin issuers collect fiat currency from users, place those funds into segregated reserve accounts, and mint an equivalent quantity of tokens on one or more blockchain networks. 

When a holder redeems the stablecoin, the issuer burns the token and returns the underlying fiat. The reserves must remain fully backed at all times. 

Under the EU’s Markets in Crypto-Assets Regulation (MiCA), for example, electronic money token (EMT) issuers must hold reserves in high-quality liquid assets, including a minimum share of bank deposits (30% or 60%), diversified across institutions.

In the US, the GENIUS Act of 2025 requires 100% backing in assets such as cash, US government bonds, and registered money market funds. 

What are the Benefits of Stablecoins Compared to Current Alternatives?

Stablecoins address some of the most stubborn inefficiencies in global payments. Traditional correspondent banking can take days and cost $25–50 per transaction, particularly on corridors between emerging markets. Stablecoins can reduce this to near-instant settlement at a fraction of the cost.

There are some key advantages:

• Unlike RTGS systems that operate during business hours, stablecoins settle around the clock, including weekends and holidays.

• Smart contract logic can be embedded into stablecoin transactions, enabling conditional payments, escrow arrangements, and automated compliance checks.

• A single stablecoin can operate natively across 30+ blockchain networks. Circle’s USDC, for example, is deployed across 32 chains.

• Fewer intermediaries in the settlement chain means lower fees and reduced counterparty risk.

What are some Ideal Use Cases of Stablecoins for Banks?

Stablecoins are best suited for cross-border payments and remittances, on-chain settlement of digital asset trades, and programmable commerce where payment conditions need to be encoded into the transaction itself. 

They are compelling for corridors where existing infrastructure is slow or expensive, such as emerging-to-emerging market flows that currently require USD intermediation.

Let’s Look at Some Real Stablecoin Implementations by Banks

1. SG-Forge’s EUR CoinVertible (EURCV). 

Société Générale’s digital assets subsidiary, SG-Forge, has been operating its euro-denominated stablecoin EURCV and received MiCA approval to operate as an electronic money institution in France. 

In 2025, SG-Forge also expanded its stablecoin offerings that include a USD-denominated variant. SG Forge is itself the first major European bank to issue stablecoins in multiple currencies. 

Source: SG Forge

2. European Bank Consortium for Euro Stablecoin Initiative

In September 2025, nine European banks announced a joint initiative to launch a euro-denominated stablecoin. This consortium approach tells us the industry’s recognition that no single bank can achieve the network effects needed for mass adoption. 

The initiative is a direct response to the dominance of USD-denominated stablecoins, which account for roughly 99% of stablecoins in circulation. 

Source: UniCredit

3. BNY Mellon’s Stablecoin Custody Infrastructure.

BNY Mellon, the world’s largest custodian bank, has expanded its digital asset custody services to support stablecoin issuers.

Source: BNY

They provide the institutional-grade safekeeping infrastructure that regulators and institutional clients expect.

2. CBDCs for Banks

A central bank digital currency is a digital form of a country’s sovereign currency, issued and guaranteed by the central bank. Unlike stablecoins, which are private liabilities backed by reserves, a CBDC is public money. We can say digital equivalent of cash or central bank reserves.

Banks don’t issue CBDCs. They distribute them. Most CBDC models follow a two-tier architecture: 

1. The central bank issues the currency and manages the core ledger, while 
2. Commercial banks and regulated intermediaries handle the customer-facing distribution, KYC, and wallet management. 

This preserves the existing banking structure and upgrades the underlying monetary infrastructure.

How Commercial Banks Work with CBDCs?

In a typical two-tier wholesale or retail CBDC model, the central bank maintains the master ledger of all outstanding digital currency. Commercial banks request CBDC from the central bank, debiting their reserve accounts in return, and then distribute it to their customers through digital wallets or integrated banking apps. 

Settlement between banks can happen in real time on the central bank’s ledger. RTGS does the same but with programmability, 24/7 availability, and potential cross-border interoperability.

For wholesale use cases, CBDCs can serve as the ultimate settlement asset on blockchain-based financial market infrastructures. 

The European Central Bank conducted exploratory DLT settlement trials with over 60 industry participants. Settled €1.6 billion in total value over a six-month period in 2024.

What are the Benefits of CBDC Compared to Current Alternatives?

CBDCs provide something no private instrument can. The finality and credit risk-free nature of central bank money. This matters enormously for wholesale settlement, interbank payments, and any use case where counterparty risk must be eliminated entirely.

Here are some Key advantages of CBDC for banks:

1. CBDC transactions carry the same legal finality as central bank reserve transfers, removing any ambiguity about when a payment becomes irrevocable.

2. CBDCs allow central banks to maintain control over the domestic monetary system, even as private digital currencies gain traction.

3. Retail CBDCs can provide wallet-based access to digital payments for unbanked populations, bypassing the need for a traditional bank account.

4. Wholesale CBDCs can serve as the risk-free settlement leg in delivery-versus-payment (DvP) and payment-versus-payment (PvP) transactions involving tokenized securities and other digital assets.

Here are some Ideal Use Cases of CBDC for Banks:

CBDCs are best suited for wholesale interbank settlement, cross-border payment corridors that require sovereign-grade finality, and domestic retail payments in jurisdictions where financial inclusion is a policy priority. 

They are also the natural settlement asset for tokenized capital markets, where the elimination of counterparty risk is critical.

Here are some Real CBDC Implementations by Banks:

1. China’s e-CNY:

China’s digital yuan is still the most advanced large-economy CBDC deployment. By November 2025, cumulative transaction volume reached 16.7 trillion yuan (US$2.38 trillion), with ongoing expansion across domestic retail and pilot wholesale use cases 

In 2025, China also began exploring allowing banks to pay interest on e-CNY holdings to drive further adoption.

Source: The State Council, The People’s Republic of China

2. HKMA e-HKD Pilots.

The Hong Kong Monetary Authority has been running e-HKD pilot trials as part of its broader digital currency strategy. These pilots explore retail CBDC use cases, including programmable payments, offline transactions, and tokenized deposit interoperability. The HKMA is also developing financial market infrastructure through Project Ensemble to facilitate the use of wholesale CBDCs alongside tokenized deposits.

Source: Hong Kong Monetary Authority

3. ECB Digital Euro Preparation:

The European Central Bank has stated that a digital euro could launch by 2029. The preparation phase, which began in late 2023, involves extensive technical prototyping, rulebook development, and industry consultation. Banks across the euro area are positioning themselves as future distributors.

Source: European Central Bank | Eurosystem. 

3. Tokenized Deposits for Banks 

Tokenized deposits are the most conceptually simple form of tokenized money for banks. They are existing bank deposits. They have the same credit obligations that sit on a bank’s balance sheet today, but represented and transferable on a distributed ledger. The money doesn’t change. Only the rails.

A tokenized deposit is still a deposit. It is still covered by deposit insurance. It is still subject to banking regulation. The bank still creates credit through its lending activities. What changes is that the deposit can now settle in real time, operate 24/7, and interact with smart contracts for programmable treasury operations.

The tokenized deposits are bank liabilities that can fund a portfolio of loans and securities, exactly like traditional deposits, in contrast to stablecoins that are backed 100% by safe assets.

When regulatory costs are moderate and banks’ risk-shifting incentives are limited, allowing tokenized deposits to serve blockchain-based commerce can expand bank credit and raise welfare.

How Tokenized Deposits Work Within Banks?

A bank issues a digital token that represents a claim against the bank, denominated in fiat currency. The token is recorded on a shared ledger, either a private permissioned network, a public permissioned chain, or, in some cases, a public blockchain with compliance layers.

When the token is transferred between parties, it represents a transfer of the underlying deposit claim. Settlement is handled on-chain, but the legal relationship remains between the depositor and the bank.

This means the bank continues to manage its balance sheet as it always has. The deposit appears in the bank’s accounts. The bank can lend against it. The depositor is protected by deposit insurance. The only difference is that the record of ownership and the settlement of transfers happen on a blockchain rather than through traditional payment messaging systems.

What Benefits Tokenized Deposits Bring to Banks?

Tokenized deposits preserve the core economic function of banking, which was credit creation but add the operational benefits of blockchain. 

This is their main advantage over stablecoins, which by design do not fund lending.

Here are some Key advantages of Tokenized Deposits for Banks:

• Tokenized deposits are always bank liabilities. There is no disintermediation. Banks retain their role in credit creation and monetary policy transmission.

• Customers holding tokenized deposits benefit from the same protections as holders of traditional deposits.

• Regulators already know how to supervise deposits. Tokenized deposits fit within existing prudential frameworks, reducing the regulatory uncertainty that surrounds stablecoins.

• Banks can offer corporate clients automated cash sweeping, conditional payments, and real-time liquidity optimization through smart contract logic layered on top of deposit tokens.

• Corporate treasurers can move funds across accounts, entities, and even geographies without waiting for batch processing windows.

What are some Ideal Use Cases of Tokenized Deposits for Banks?

Tokenized deposits are best suited for institutional treasury and liquidity management, intrabank and interbank settlement, and as the on-chain settlement layer for tokenized securities transactions. 

They are great for large corporations that maintain multi-bank relationships and need real-time visibility and control over global cash positions.

Here are a few Real Implementations of Tokenized Bank Deposits by Banks

1. J.P. Morgan’s Kinexys Platform and JPMD Token

J.P. Morgan’s Kinexys platform has processed over US$1.5 trillion in cumulative tokenized deposit transactions. This means on average more than US$2 billion daily in institutional payments. 

In June 2025, J.P. Morgan announced the JPMD deposit token proof-of-concept on Base, which is a Coinbase-backed Ethereum L2. This was a big step toward public blockchain interoperability for deposit tokens.

We need to redesign it completely. 

2. DBS Token Services:

DBS Bank, headquartered in Singapore, operates a commercially live tokenized deposit platform that supports multiple use cases across treasury liquidity management, conditional payments, and programmable rewards. 

DBS has been an active participant in the Monetary Authority of Singapore’s Project Guardian and Partior, which is a cross-border settlement platform that was co-founded with J.P. Morgan and Standard Chartered.

Also, DBS and JP Morgan Kinesyx are jointly developing a framework for interbank tokenized deposit transfer across multiple blockchains. 

3. HSBC Tokenized Deposits

HSBC has been advancing its tokenized deposit capabilities through its Orion digital assets platform. The bank has used this platform for both tokenized deposit pilots and the issuance of tokenized bonds that include a Hong Kong Government tokenized green bond. 

HSBC’s approach is using tokenized deposits as the settlement layer for a broader ecosystem of tokenized financial instruments.

Which Form of Tokenized Money Banks are Favouring?

Based on the available data through early 2026, tokenized deposits are coming out as the most adopted form of tokenized money among regulated banks. The reason is structure. Tokenized deposits require the least disruption to a bank’s existing business model, balance sheet, and regulatory relationships.

J.P. Morgan’s Kinexys alone has processed over US$1.5 trillion in cumulative volume. DBS and Citi have launched commercial products. HSBC, Standard Chartered, and UOB are running live pilots or production systems. All of them are infrastructure upgrades applied to real client flows.

The familiar regulatory framework, deposit insurance coverage, and balance-sheet treatment make tokenized deposits the lowest-friction entry point for most banks.

That said, the right choice depends on who the bank is serving and where it operates.

• For global payments and remittance corridors, stablecoins offer superior reach and 24/7 availability. Banks in jurisdictions with clear stablecoin regulations (such as the EU under MiCA or the US under the GENIUS Act) may find stablecoin issuance or partnership a suitable option.

• For wholesale settlement and interbank payments, CBDCs provide the highest level of settlement finality and risk elimination. Banks in jurisdictions with active CBDC programs (such as China, the euro area, or Singapore) should be positioning themselves as distribution partners.

• For institutional clients needing programmable treasury management, tokenized deposits are the natural fit. They preserve the bank-client relationship and add programmable automation without requiring clients to adopt new asset classes.

Comparison Table: Stablecoins Vs. CBDCs Vs. Tokenized Deposits

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