Tokenized Deposits Vs. Stablecoins Vs CBDCs – The Evolving Tokenized ecosystem

Digital finance is undergoing a rapid transformation, driven by the growing interest of central and commercial banks in blockchain-enabled assets. At the forefront of this shift are three pivotal innovations: tokenized bank deposits, Central Bank Digital Currencies (CBDCs), and stablecoins—each playing a distinct role in shaping the future of money and financial infrastructure.

Stablecoins and tokenized bank deposits are both digital representations of fiat currency, but they differ significantly in their design and purpose. Stablecoins are designed to maintain a 1:1 peg to a fiat currency like USD, often through reserves or algorithmic mechanisms, while tokenized deposits represent ownership of existing bank deposits, allowing for on-chain transfer and potential benefits like fractional ownership.  

Unlike Central Bank Digital Currencies (CBDCs) are the digital equivalent of a nation’s fiat currency, issued and regulated by the central bank. They aim to combine the transactional efficiency of cryptocurrencies with the stability and trust inherent in sovereign money. With over 130 countries actively exploring CBDCs, it’s clear that central banks view national digital currencies as essential tools for modernizing payment systems, strengthening monetary sovereignty, and advancing global financial inclusion.

“Tokenized deposits, CBDCs, and stablecoins, while distinct in function and design, share a common foundation in that they leverage blockchain technology to enhance the efficiency, security, and accessibility of financial transactions.”

Stablecoins : The Early Movers in Digital Value

Stablecoins emerged as the first mainstream use case of blockchain in finance. They are blockchain-based tokens pegged to stable assets, usually fiat currencies like USD, and are issued by private entities (e.g., USDC by Circle, USDT by Tether, DAI by MakerDAO). In recent advancement in stablecoins ecosystem , banks joining hands and issuing stablecoins , Mastercard, Ripple, PayPal are started issuing stablecoins on chains.

The data from VISA clearly signify that Stablecoins are coming mainstream - https://visaonchainanalytics.com/

• Stablecoins will dominate open ecosystems, programmable commerce, and financial inclusion.

• Bank stablecoins act as bridges between closed banking ecosystems and open digital asset networks

• U.S. Stablecoins (GENIUS) Act making stablecoins easily accessible and regulated.

• Tether’s USDT surged past US $150 billion in market cap, Circle launched a nine‑chain Circle Payments Network, and PayPal’s PYUSD landed a Coinbase listing.

Tokenized Bank Deposits : The Institutional Contender 

Unlike stablecoins, tokenized deposits are issued by regulated banks, representing actual demand deposit liabilities on a blockchain ledger. Issued by licensed banks (e.g., JPM Coin, Citi’s Regulated Liability Network, Citi Token Service, HSBC orion)

• JPMorgan’s Onyx/JPM Coin is live for institutional clients

• Citi and MAS are exploring cross-border settlements with tokenized deposits under Project Guardian

• Tokenized deposits will power regulated finance, capital markets, and compliant tokenization infrastructure.

• Tokenized deposits are part of a future tokenized financial market infrastructure, offering full compliance, traceability, and programmability.

• Monetary Authority of Singapore (MAS) expanded its four‑year‑old Project Guardian pilot, inviting DBS, HSBC and Standard Chartered to issue on‑chain versions of customer deposits for foreign‑exchange and repo trades

• J.P. Morgan’s Kinexys (formerly JPM Coin) crossed US $1.5 trillion in cumulative value this spring after settling a tokenized Treasury ETF against a deposit token on a public test‑net

Central Bank Digital Currency : Sovereign Currency by central Banks.

It is a digital form of cash issued by a central bank as legal tender. A retail CBDC is designed to be used by the general public and merchants for retail payments and peer-to-peer transfers. Retail CBDC will co-exist with other forms of payment. It will be an additional form of money, exchangeable one to one with cash and bank balances.

Wholesale CBDC is a currency issued by a central bank in digital form, designed to be used exclusively by financial institutions that hold reserve accounts at a central bank. Its primary purpose? Settling large, low-frequency, high-priority transactions using tokenized assets (including cross-border transactions). Like traditional settlement systems, it is not accessible to the general public

Global CBDC Landscape

·       130+ countries are exploring or piloting CBDCs.

·       China’s e-CNY leads with large-scale trials across cities.

·       India launched Digital Rupee pilots (retail and wholesale) in Dec 2022

·       Europe, UK, and the U.S. are designing CBDCs with focus on privacy, control, and interoperability.

The Digital Money Era

We are witnessing a seismic shift in the way value is created, exchanged, and stored. The rise of Central Bank Digital Currencies (CBDCs), stablecoins, and tokenized bank deposits signals the dawn of the Digital Money Era—where programmable, interoperable, and blockchain-based assets redefine global finance. As governments and institutions reimagine money for a digital-first economy, the foundations of payments, credit, and settlement are being rebuilt to be faster, more transparent, and inclusive than ever before.

The future of money is being shaped by three powerful forces: stablecoins, tokenized bank deposits, and Central Bank Digital Currencies (CBDCs). Each plays a unique role in the evolving financial system, and their trajectories will depend on use case fit, regulation, interoperability, and trust 

The future is interoperable, where:

• Stablecoins serve fintech and digital asset rails,

• Tokenized deposits support institutional-grade settlement and liquidity,

• CBDCs form the base layer for government-backed systems and trusted clearing.

The Finternet—an internet of value—is emerging with all three working in coexistence, each reinforcing financial inclusion, efficiency, and innovation.

References:

https://www.forbes.com/sites/zennonkapron/2025/05/26/tokenized-deposits-vs-stablecoins-the-quiet-war-for-crossborder-money/

https://www.bankofcanada.ca/wp-content/uploads/2024/10/swp2024-35.pdf

https://www.bis.org/publ/bisbull73.pdf

https://www.kaleido.io/blockchain-blog/tokenized-deposits-vs-cbdcs-vs-stablecoins

https://www.gi-de.com/en/spotlight/currency-technology/demystifying-tokenized-currencies

#digitalcurrency #tokenization #cbdc #stablecoins #digitalmoney