Global Regulators Favor Tokenized Deposits Over Stablecoins: Key Insights
Global Shift: Regulators Favor Tokenized Deposits Over Stablecoins
Regulatory Preferences Emerge
Recent insights from JPMorgan analysts indicate a growing global inclination among regulators, particularly outside the United States, towards favoring tokenized bank deposits instead of stablecoins. Notably, the Bank of England is among the institutions advocating for this innovative model.
Advantages of Tokenized Deposits
Tokenized deposits, which are built on blockchain technology, offer traditional banking safeguards such as insurance and central bank backing while facilitating programmable payment options. This hybrid approach aims to combine the benefits of digital assets with the security of conventional banking systems.
Stability vs. Flexibility
Unlike stablecoins, which can experience significant fluctuations in value—an issue underscored by the collapses of Terra and FTX—tokenized deposits are designed to maintain their value consistently. These non-transferable deposits settle at face value between financial institutions, making them a more stable alternative. However, despite their regulatory advantages, they may not provide the same level of liquidity and adaptability that stablecoins currently enjoy in the cryptocurrency market.
Diverging Paths: U.S. vs. Global Regulations
In contrast to the global trend, the United States is moving forward with the GENIUS Act, which is expected to be signed into law by President Trump. This legislation promotes the issuance of stablecoins by banks. Meanwhile, JPMorgan is actively exploring its own blockchain-based deposit token, known as JPMD, utilizing Ethereum’s Base network for testing.
Author Insights
About the Author
Kosta Gushterov
Reporter at Coindoo
Kosta has been part of the Coindoo team since 2021, quickly making a name for himself through his eagerness to learn, strong commitment, and analytical skills. He covers a broad spectrum of topics and produces high-quality reviews, PR articles, and educational content. His work is frequently referenced by other media outlets.
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