We are revisiting whether markets will accept new payment formats such as stablecoins and tokenized assets after Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos told the Federal Reserve’s Jackson Hole symposium that stablecoins are not a credible way to make payments at scale. He argued that tokenized bank deposits are a better way to capture the benefits of new payments technology without undermining the existing monetary system.
Let us explain the BIS position.
Mr. de Cos’s case was that today’s stablecoins fail the basic tests of money. They are not truly interchangeable at par: moving from one coin or platform to another usually means selling and buying, often at a cost, which breaks the “singleness” of money. They also sit on fragmented public blockchains, so even the “same” token on different chains is not cleanly interoperable without risky bridges. And because AML and other controls are hard to apply consistently across those networks, they raise integrity and money-laundering concerns.
But Mr. de Cos also said the two instruments can coexist, but with different jobs. Tokenized deposits should handle everyday payments; stablecoins should be limited to more specialized uses under tight rules (B2B). Tokenized deposits stay inside the two-tier system, like bank liabilities settled in central bank currency, so a dollar claim remains a dollar, redeemable at par with finality. Even that model, he added, still must solve interoperability, governance, and legal questions around settlement.
The speech fits a longer BIS line: stablecoins look more like investment products than cash, lack the elasticity of bank money, and should not become the backbone of the payment system.
Whoa, those are fighting words for the emerging stablecoin world, tell us more.
A tokenized deposit is still a normal bank deposit. The bank has recorded that deposit as a digital token on a ledger so it can move and settle like a crypto asset; usually 24/7, and often with programmable rules.
This is not a new kind of money but a claim on the bank, in a different wrapper. If a customer has $1 million at JPMorgan and tokenize $100,000 of it, that $100,000 is still a JPMorgan deposit. It can still earn interest, sits on the bank’s balance sheet, and should be eligible for deposit insurance up to the usual limits. The token is the receipt; the deposit is the asset.
For example.
A company tells its bank to move part of a checking balance onto the bank’s blockchain or permissioned network. The bank issues tokens that represent that balance one-for-one. Those tokens can be sent to another approved account, often another customer of the same bank, or a bank in the same network. When the payment is initiated, the tokens update instantly and the bank’s books update with them. Convert it back and it is ordinary cash in the account again. No T-bills have to be sold; no separate issuer has to redeem a coin.
That is why the BIS prefers tokens to stablecoins for everyday payments. Settlement can still clear in central bank money between banks, so a dollar at Bank A remains a dollar at Bank B. That is the “singleness of money”: according to the BIS a bank account holder should not have to sell one instrument and buy another, just to spend it.
How they differ from stablecoins.
A stablecoin such as USDT or USDC is usually a claim on a non-bank issuer and that issuer’s reserves, typically cash and short-term Treasuries. It lives on public blockchains, can be sent to almost any wallet, and is generally neither a bank deposit nor FDIC-insured. If the issuer fails or the peg slips, the holder is a creditor of the company, not a bank depositor. That distinction sounds alarming, but in its current form Circle’s USDC is designed to be redeemable 1:1 and is backed by cash and highly liquid short-term securities, such as Treasury bills. For context, USDC has supported trillions of dollars in transactions since launch. For a more complete discussion of Circle’s issued USDC please see our publications from August 9th, May17th, April 19th and July 3rd of last year.
On the other hand, a tokenized deposit is a claim on the bank. It is issued by a regulated deposit-taker, supervised like other deposits, and usually moves on a closed or permissioned network among known customers. It is less open than a stablecoin and less portable across the open crypto world. In return it keeps bank-style protections, lender-of-last-resort access, and par conversion into central bank money.
Why banks and central banks like them.
Tokenized deposits add the useful parts of blockchain like speed, always-on settlement, smart contracts, delivery-versus-payment all without leaving the two-tier system of commercial banks plus the central bank. A payment, a securities transfer, and cash settlement can be bundled into one atomic step. That is the idea behind projects such as the BIS’s Project Agorá (and JP Morgan see below).
The catch.
They only travel easily inside the issuing bank or a pre-approved network. Interoperability across banks and countries is still unfinished. In one line: a stablecoin is private digital cash backed by reserves; a tokenized deposit is your bank account, put on a programmable ledger.
On November 30, 2025, we opined on JP Morgan’s asset tokenization initiative and think bears repeating:
“JP Morgan’s (NYSE: JPM) tokenization program is centered on its Kinexys platform, a bank-led blockchain infrastructure designed to enhance financial systems through distributed ledger technology (DLT) while emphasizing protection, privacy, and reliability. Launched as a rebranding and expansion of earlier efforts (formerly Onyx), Kinexys enables the digitization of real-world assets, such as private equity funds, money market funds, and other alternative investments, into blockchain-based tokens. This process involves creating digital representations of asset ownership on a permission blockchain, where smart contracts embed rules for automation, compliance, and transactions.
The bank’s recent rollout of their own digital token, JPM Coin (now branded under Kinexys Digital Payments), on Coinbase‘s Base network, feels like a watershed moment, validating blockchain, tokenization and digital asset technology not as fringe tech but as core infrastructure for trade finance. This positions JP Morgan as a pacesetter in what could be a $100+ trillion tokenized asset market by 2030.
Let us explain.
This technological introduction is as historic for its scale as it is transformational. On November 12, 2025, JP Morgan officially launched JPM Coin (ticker: JPMD), a USD-denominated deposit token, for institutional clients on Base, Coinbase’s Ethereum Layer 2 network. This follows a June 2025 proof-of-concept pilot involving institutions such as B2C2, Coinbase, and Mastercard, where participants executed near-instant issuance and redemptions. Among the key performance metrics: Settlement speed for transactions between known and boarded parties is accomplished in seconds, not days, leveraging Base’s sub-second finality for 24/7/365 operations. Yield and compliance are acknowledged because unlike stablecoins restricted by the GENIUS Act (which bars yield payments), JPMD earns native interest as FDIC eligible bank deposits, with full regulatory backing. Tremendous scale and volume throughput run rate of $1.2 trillion annually which equates to the Kinexys daily blockchain volume of $3 billion.
JP Morgan’s Tokenized Ecosystem Components include:
- Kinexys Fund Flow: A shared digital platform that connects fund managers, administrators, distributors, and investors for real-time transparency into funding status and capital events. It supports tokenized investor data and enables instant settlements, as demonstrated in a recent first transaction with Citco and J.P. Morgan Asset & Wealth Management in October 2025.
- JPM Coin (rebranded as Kinexys Digital Payments): A USD-denominated deposit token for institutional clients, facilitating near-instant 24/7 peer-to-peer settlements and payments on the blockchain, serving as an alternative to stablecoins.
- Project Guardian: A proof-of-concept initiative exploring how asset tokenization can redesign portfolio management, allowing for smarter, more accessible assembly and management of investments.
The applications for digitizing assets within JP Morgan are widespread, among the more promising is the tokenization of money market fund (MMF) shares which then may be used as collateral for OTC derivatives, potentially unlocking liquidity in a $6T+ market. These are not all hypothetical discussions; they are live. Another use case is international payments which may take days, limited hours of operation on both sides of the transaction, all complicated by corresponding bank involvement and increased counter party risk. JPMD efficiently cuts through the fog of pending overseas settlement with near instant, always on, 24/7, clearing capability. And at a lower cost.
Leadership Evolution, Dimon’s Pivot
Jamie Dimon, Chairman and CEO of JP Morgan, once-Bitcoin skeptic (famously dubbing it a “pet rock” in 2017) has pivoted decisively. At the Future Investment Initiative in Riyadh on October 30, 2025, he declared: “Crypto is real. Blockchain is real. Stablecoins are real… JPMorgan deposit coin and smart contracts will be used by all of us.” He reiterated this at the Fortune Most Powerful Women Summit, emphasizing private/permissioned chains like Kinexys for controlled innovation, replacing “clunky” intraday repos with 24/7 smart contracts. Dimon’s nod to stablecoins’ edge over “traditional cash” (e.g., for speed) underscores our point, this is no longer hype.
We are witnessing institutional buy in and confirmation that like architectures are being built in parallel. For example, Citigroup, HSBC, and Deutsche Bank are piloting similar tokenized deposits; a nine-bank consortium (including Goldman Sachs and BNY Mellon) is tokenizing money market funds (MMFs) with BlackRock and Fidelity. Stablecoins are a step function improvement in transactional efficiency but deposit tokens like JPMD sidestep yield bans, giving banks an asymmetric edge. “
