Tokenized Deposits vs Stablecoins: Four Ways a Bank Can Put Money Onchain

A deposit token records the bank's ordinary deposit liability on a distributed ledger, so the client holds the same claim on the bank that an account balance gives them. The European Banking Authority's December 2024 report on tokenized deposits found that putting a deposit claim on DLT "does not per se alter the fundamental nature of the claim and thus its regulatory qualification as a deposit". US law lands in the same place: the GENIUS Act excludes from its stablecoin definition any deposit, "including a deposit recorded using distributed ledger technology", and its Section 16(a) preserves a bank's power to accept deposits and issue "digital assets that represent those deposits".

The bank therefore needs no new license, the token can pay interest, and insurance follows the deposit. Capital follows the claim too: the Basel cryptoasset standard lets a tokenized claim on a bank, "including in the form of deposits", sit in Group 1a when it meets the standard's conditions, starting with the same legal rights as the untokenized claim. The same standard bars the issuing bank from treating the tokens as stable retail deposits in its liquidity ratios. The trade-off is who can hold it: in the cases the EBA reviewed, the claim is bound to the account holder and "not directly transferable to a non-client of the bank".

Most live bank programs use this model. J.P. Morgan runs two deposit products under its Kinexys unit: blockchain deposit accounts on a private, permissioned ledger, and JPM Coin (ticker JPMD), a USD deposit token on the public Base network that only vetted institutional clients can hold. J.P. Morgan reports that Kinexys processes about $7 billion a day and over $4 trillion since inception (September 2026), a figure for the whole platform, its private-ledger products included, not for JPMD alone.

Citi told investors in May 2026 that hundreds of clients move close to $1 billion a day through Citi Token Services, which runs on a private-permissioned blockchain in seven markets. HSBC, DBS, Standard Chartered and BNY run live programs of their own, listed in the table below.

Emma Landriault, Global Head of Kinexys Labs at J.P. Morgan Payments, speaking in a personal capacity on The Protocol Roundtable in October 2026, said of the blockchain deposit accounts and JPMD that "these are designed to be deposit-based products and ultimately commercial bank money, meaning that they have to fit into the existing depository legislation". Inside one bank the token moves between clients at any hour, though the core systems behind it still close: J.P. Morgan lists a three-hour downtime every Saturday (3 to 6 p.m. EST) for moving funds between legacy accounts and its blockchain deposit accounts. A payment to another bank's client still needs an interbank leg, and the BIS warns that private permissioned networks risk becoming walled gardens. On a public chain the open issues change: J.P. Morgan's June 2026 research with MIT names transaction ordering, censorship, receipt of unsolicited tokens and exposure to sanctioned entities.

A bank that wants a token anyone can hold issues a stablecoin, and the route depends on the market. Once GENIUS takes effect on 18 January 2027, an insured US bank cannot be the issuer itself: the Act permits approved subsidiaries of insured banks, federal qualified issuers and state qualified issuers. SoFi Bank issues SoFiUSD itself today, and the OCC's Corporate Decision 1388 (July 2026) approved a SoFi Bank operating subsidiary that will issue and redeem payment stablecoins, under the OCC's existing operating-subsidiary rules and on condition that the bank conforms to GENIUS once its rules apply.

In the EU a credit institution may issue an e-money token itself, after notifying its supervisor 40 working days ahead and publishing a white paper, and ESMA's interim register of 16 October 2026 lists four that do so directly, Banking Circle, ODDO BHF, CACEIS and Bison Bank, and one bank group that issues through a subsidiary. Société Générale chose the subsidiary route: SG-FORGE, a licensed e-money institution, issues EURCV and USDCV, and Luxembourg's Banking Circle issues EURI as a bank. The UAE requires a separate entity, the UK's PRA expects one and Singapore proposes one, while Hong Kong licensed HSBC itself as a stablecoin issuer in April 2026, alongside the Standard Chartered-backed Anchorpoint, issuer of HKDAP.

Each route carries the same three costs. No interest: MiCA Article 50 treats any benefit tied to holding time as interest, including benefits paid by third parties, and GENIUS bars issuers from paying "any form of interest or yield" solely for holding once it takes effect. Hong Kong's licensed issuers and the UAE's may not pay interest either, the UK's FCA has made the same rule for its regime that starts in October 2027, and Singapore proposes it. No deposit insurance: GENIUS says payment stablecoins shall not be "subject to deposit insurance", the FDIC proposes that reserve deposits would not be insured to stablecoin holders on a pass-through basis, and in the EU a bank issuing directly is "not required to maintain segregated reserves for EMTs", so holders rely on the bank's general credit, outside the deposit guarantee schemes.

The third cost is liquidity: under the Basel cryptoasset standard, an issuing bank recognizes 100% outflows in its LCR when the coin is redeemable within 30 days, and Group 1b and Group 2 cryptoassets "must not be considered HQLA". Hong Kong has applied that standard since January 2026; the US, UK and EU have not implemented it, and the Basel Committee expects to update its review by the end of 2026.

Ilia Shirobokov, Head of Blockchain at ADI Foundation, told the Roundtable that banks and other institutions coming onchain "try to repeat what already exists", which is why "we see originally, firstly, stablecoins and not tokenized deposits, despite the tokenized deposits [being] a bit more natural thing for banks". The draw is a format the market already trades and the reach that comes with it; the three costs above are what a bank accepts in exchange.

Circle issues USDC and EURC as MiCA e-money tokens from its French e-money institution, and an existing coin is often the only cash on the ledger where a tokenized asset lives. When J.P. Morgan arranged Galaxy's commercial paper on Solana in December 2025, the issuance and redemption proceeds were set to be paid in USDC, not in JPMD, which runs on Base. Nearly all stablecoin value is in dollars: the BIS's June 2026 Annual Economic Report counts 99.4% of fiat-backed stablecoins by market value as dollar-pegged. No issuance license is needed; an EU bank that provides crypto-asset services around the coin gives its supervisor 40 working days' notice under MiCA Article 60.

The bank then holds a claim on someone else's balance sheet. Emma Landriault, again speaking in a personal capacity on the Roundtable, described how corporate treasurers looked at holding stablecoins at scale: "every single stablecoin, they would want to go in and look at what are the reserves made up of." The capital treatment is also less favorable: under the Basel standard a held stablecoin is never HQLA and carries at least an 85% required stable funding factor.

The choice of coin also has legal consequences. Once the GENIUS Act takes effect, a stablecoin from an issuer that is not permitted may not be treated as cash or a cash equivalent for accounting purposes, used as cash-equivalent margin at regulated intermediaries, or accepted as a settlement asset for wholesale payments between banks, and from 18 July 2028 US service providers may offer only coins from permitted issuers or from foreign issuers under a comparable regime. In the EU only an authorized issuer's e-money token may be offered to the public or admitted to trading. In the UAE, the central bank's payment token rules allow registered foreign tokens only for buying virtual assets, which leaves general mainland payments to licensed dirham tokens.

Tokenized money market fund shares complement the other three. The token is a share in a fund: it earns the fund's yield and moves only between allowlisted holders, but its value and redemption follow the fund, and as a security it falls outside MiCA, which excludes financial instruments, so fund rules apply. BlackRock's BUIDL, for example, is a private fund for qualified purchasers that launched with a $5 million minimum and pays monthly dividends as new tokens. For a bank the use is cash at rest and collateral: BUIDL is accepted as margin on several crypto venues, and CFTC staff issued guidance on tokenized collateral in December 2025.

In practice the two can work together. Hong Kong's EnsembleTX pilot started with tokenized deposits paying for tokenized money market fund transactions: the deposit token as the payment leg, the fund share as the asset. Under Basel a tokenized asset counts as HQLA only if the untokenized asset would, and money market fund shares are not on the US LCR's list of HQLA, so a bank holds the share for yield and collateral and does not count it as liquidity. The product-by-product comparison of tokenized funds and treasuries, wrappers and yields included, is in our guide to tokenized treasuries vs stablecoins.