According to the Wall Street lender, financial regulators outside the United States are showing a growing preference for tokenized bank deposits over stablecoins.
The trend highlights a shift in how traditional finance seeks to adapt digital technologies without compromising core regulatory and systemic safeguards.
The research, led by JPMorgan’s Nikolaos Panigirtzoglou, highlights how central banks and regulators, including the Bank of England, are leaning toward digital instruments issued by commercial banks that remain fully integrated within the existing financial system.
These tokenized deposits operate on blockchain infrastructure while maintaining the foundational protections of traditional deposits, such as access to central bank liquidity, capital buffers, and compliance with anti-money laundering rules.
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.
As such, they do not represent a true exit from the regulated financial framework.
JPMorgan’s analysis suggested that such conditions would reduce incentives for banks to issue their own stablecoins.
This signals a more open approach to integrating stablecoins within the broader financial ecosystem.
The bank filed a trademark for the deposit token product in June, pointing to potential applications in settlement, programmable finance, and cross-bank transfers.
