JPMorgan: Regulators Worldwide Favor Tokenized Bank Deposits Over Stablecoins

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JPMorgan: Regulators Worldwide Favor Tokenized Bank Deposits Over...

Srebrin Petrov
18 July, 2025, 21:53
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JPMorgan: Global Regulators Prefer Tokenized Bank Deposits Over Stablecoins for Systemic Stability

Global financial regulators are increasingly favoring tokenized bank deposits over stablecoins, according to new research from JPMorgan, as reported by The Block on July 18, 2025. This shift highlights how traditional finance is embracing blockchain technologies while safeguarding the structure and stability of fiat-based banking systems.

Tokenized Deposits Gain Regulatory Favor

The research, led by Nikolaos Panigirtzoglou, a strategist at JPMorgan, reveals that central banks and regulatory bodies—particularly outside the United States—prefer digital instruments issued directly by commercial banks. These tokenized deposits, built on blockchain infrastructure, maintain essential protections provided by conventional banking, including:

Access to central bank liquidity
Capital adequacy requirements
Anti-money laundering (AML) compliance

This approach allows for innovation in payments and settlements while ensuring financial stability and regulatory oversight remain intact.

Why Tokenized Deposits Over Stablecoins?

The form of tokenized deposits receiving the most support is the non-transferable or non-bearer type, which can only be settled between accounts at full face value. This design reduces the risk of price discrepancies and helps preserve the "singleness of money"—the principle that all money in the economy maintains a consistent value.

In contrast, stablecoins and transferable bearer-style digital deposits are more susceptible to:

Market-driven price fluctuations
Credit and liquidity risks
Systemic vulnerabilities exposed in previous market failures

Although stablecoins remain widely used within crypto markets for their liquidity and ease of transfer, JPMorgan's report emphasized that these assets usually remain tethered to the traditional banking system by being backed with short-term government securities and other regulated instruments.

Regional Regulatory Divergence: UK vs. US

The United Kingdom and other jurisdictions have expressed reservations about allowing commercial banks to issue stablecoins, particularly under frameworks that would mandate banks to hold central bank reserves without earning yields. Such constraints could diminish banks' incentives to develop their own stablecoin offerings.

Bank of England Rejects Stablecoins, Prefers Tokenized Deposits

Conversely, U.S. regulators and lawmakers appear more supportive of integrating stablecoins into the financial system. The upcoming GENIUS Act, a legislative initiative backed by President Donald Trump, is expected to authorize U.S. banks to issue stablecoins directly. This move aims to foster the use of stablecoins in domestic payments and stimulate further innovation in the financial sector.

JPMorgan’s Dual Approach: Tokenized Deposits and Stablecoins

Even as it promotes tokenized deposits, JPMorgan is actively developing its own blockchain-based financial products. The bank is piloting JPMD, a permissioned deposit token being tested on Base, Coinbase’s Layer 2 blockchain network.

Additionally, JPMorgan filed a trademark for its deposit token product in June 2025, signaling ambitions in:

Settlement solutions
Programmable finance
Cross-bank transfers

Behind the scenes, the bank is also experimenting with stablecoin-related initiatives, reflecting a broader strategy that encompasses both tokenized deposits and private digital currencies.

The Future of Digital Banking Assets

JPMorgan's research underscores a broader industry pivot toward regulated tokenized financial instruments over more volatile and decentralized alternatives like stablecoins. This preference is rooted in the need to balance technological innovation with the preservation of monetary stability and regulatory compliance.

While stablecoins are unlikely to disappear, especially given their traction in the U.S., tokenized deposits may become the favored instrument in regions where regulators prioritize control, safety, and systemic integrity.

As blockchain technology continues to integrate with mainstream finance, the tug-of-war between stablecoins and tokenized deposits could define the next chapter of digital banking evolution.