BREAKING: JPMorgan Leak Shows Global Regulators Pushing Tokenized Bank Deposits—Stablecoins Sidelined

Wall Street's worst-kept secret is out: regulators worldwide are quietly choosing tokenized bank deposits over stablecoins. JPMorgan's latest bombshell reveals a coordinated pivot—and the crypto industry won't like the implications.

Bank-issued digital tokens get the green light

While DeFi maximalists rage against the machine, traditional finance is building its own blockchain rails. Tokenized deposits offer regulators what stablecoins can't—direct control, KYC baked in, and instant kill switches. The writing's been on the wall since 2023's banking collapses.

The compliance paradox

Here's the irony: the same institutions that mocked crypto now embrace its tech—just without the decentralization. Expect CBDC trials to accelerate as central banks test wholesale tokenization. Meanwhile, stablecoin issuers face their 'adapt or die' moment.

Finance never changes—it just finds new ways to recentralize power. The revolution will be tokenized... and thoroughly supervised.

Stability and control concerns

The version of tokenized deposits attracting the most regulatory support is the non-transferable kind, also known as non-bearer deposits, which are settled between accounts at full face value.

These instruments minimize the risk of price deviation and preserve uniformity across forms of money, a concept often referred to as the “singleness of money.”

In contrast, stablecoins and transferable (bearer-style) digital deposits can be subject to fluctuations in market value due to credit concerns or liquidity mismatches. Additionally, past market failures have raised red flags about the potential volatility of privately issued digital currencies.

While stablecoins remain more widely used in crypto markets due to their ease of transfer and broad liquidity, JPMorgan’s report noted that such assets often keep their backing within the traditional banking system by investing in instruments like short-term government debt.

As such, they do not represent a true exit from the regulated financial framework.

Diverging paths

In regions like the UK, regulators have questioned the viability of allowing commercial banks to issue stablecoins, especially under frameworks that might require them to hold central bank reserves without generating yield.

JPMorgan’s analysis suggested that such conditions WOULD reduce incentives for banks to issue their own stablecoins.

Meanwhile, U.S. policymakers are taking a different stance. The expected passage of the GENIUS Act, a legislative effort led by President Donald Trump, would allow banks to issue stablecoins directly and promote their use in domestic payments.

This signals a more open approach to integrating stablecoins within the broader financial ecosystem.

JPMorgan itself is exploring tokenized solutions through JPMD, a permissioned deposit coin currently being piloted on Base. The lender is also testing the waters with stablecoins behind closed doors.

The bank filed a trademark for the deposit token product in June, pointing to potential applications in settlement, programmable finance, and cross-bank transfers.