Tokenized Deposits vs Stablecoins: What Banks Are Building

The legal claim: reserve or bank

A stablecoin holder has a claim on an issuer whose only job is to hold a reserve of cash and short-term government debt equal to the coins outstanding. A tokenised deposit holder has a claim on a bank, which lends most of its deposits out and backs them with capital, liquidity rules and deposit insurance.

The US law draws the line explicitly. The GENIUS Act defines a payment stablecoin and then excludes "a deposit … including a deposit recorded using distributed ledger technology". In other words, a bank deposit does not stop being a deposit because it lives on a blockchain, and it is regulated as banking, not under the stablecoin regime (see the GENIUS Act, explained).

That difference drives everything else. A payment stablecoin issuer must hold reserves of at least 1:1 in cash, deposits, Treasury bills of 93 days or less, overnight repo and government money funds, and may not lend them out. A bank holding deposits operates on a fractional basis: it makes loans, holds capital against them, and relies on supervision, a lender of last resort and insurance. One model is narrow and fully reserved; the other is the ordinary banking system with a new ledger attached.

Side by side

	Payment stablecoin (e.g. USDC)	Tokenised deposit (e.g. JPMD)
Whose liability	A specialist issuer	A commercial bank
Backing	Segregated reserve, at least 1:1, no lending	The bank's balance sheet, capital and liquidity
Interest to holder	Prohibited for issuers (GENIUS Act)	Permitted
Deposit insurance	No (no pass-through, per FDIC)	Yes, up to standard limits, per FDIC's stated position
In insolvency	Priority claim on the reserve	Depositor claim on the bank
Who can hold it	Anyone with a compatible wallet	The bank's onboarded clients
Where it runs	Many public chains (USDC on 157 chains, per DefiLlama)	Bank-chosen networks, private or permissioned

Who issues them: live bank projects

Three global banks run live tokenised-deposit services: JPMorgan's JPM Coin (JPMD), HSBC's Tokenised Deposit Service and Citi Token Services. All three serve corporate and institutional clients only, and all sell the same feature: moving money 24/7, including across borders, without cut-off times.

JPMorgan: JPM Coin (JPMD). JPMorgan's blockchain unit, Kinexys, piloted a USD deposit token on Base, Coinbase's Ethereum layer 2, in June 2025, with B2C2, Coinbase and Mastercard completing issuance and redemption in the proof of concept. On 12 November 2025 JPMD became available to JPMorgan's institutional clients on Base. It is notable because it runs on a public chain, but holding it is permissioned. Kinexys says it has processed over $3 trillion since inception and averages more than $5 billion a day (April 2026); those figures cover all of Kinexys, not JPMD alone.

HSBC: Tokenised Deposit Service. HSBC launched the service for corporate clients in Hong Kong on 22 May 2025, starting with real-time HKD and USD transfers between a client's own wallets, with Ant International as first client. On 13 April 2026 it expanded to the United States, so the service now covers Hong Kong, Singapore, Luxembourg, the UK and the US, in EUR, GBP, HKD, SGD and USD.

Citi: Token Services. Citi's service moves tokenised deposits on a private, permissioned blockchain. On 30 September 2026 it added Japan and the UAE, bringing it to seven markets: the US, Ireland, Hong Kong, Singapore, the UK, Japan and the UAE.

A useful contrast is Société Générale's EUR CoinVertible (EURCV). It comes from a bank group but is structured as a stablecoin rather than a deposit, and DefiLlama counts about €16.9M of it on Stellar as of 2 October 2026. The issuer's identity does not decide the category; the legal structure does.

Interest and insurance

Tokenised deposits can pay interest because they are deposits; JPMorgan described JPMD as "yield-bearing commercial bank money". Payment stablecoin issuers cannot pay interest. On insurance, the FDIC has said tokenised deposits keep deposit-insurance eligibility, while stablecoins do not get pass-through cover.

The GENIUS Act bars any permitted issuer from paying "any form of interest or yield" solely for holding a payment stablecoin. JPMorgan's June 2025 announcement of the JPMD pilot pitched "the ability to pay interest to holders" as a feature and called deposit tokens "an attractive alternative to stablecoins" for clients wanting integration with traditional banking.

On insurance, FDIC Chairman Travis Hill said on 11 March 2026 that payment stablecoins "are not eligible for 'pass-through' deposit insurance", and that the FDIC "will clarify that tokenized deposits meeting the statutory definition of a deposit retain insurance eligibility regardless of technology or recordkeeping." For a corporate treasurer moving millions, the standard insurance limit covers only a small fraction of a balance; the real protection is the bank's capital and supervision. A stablecoin holder is relying instead on reserve quality and the priority claim the Act creates. If you want yield on a stablecoin, it comes from lending or liquidity provision, not the issuer; see stablecoin yield explained.

Interoperability: the hard part

A deposit token works best inside its own bank. Moving value between banks' tokens still needs settlement in central bank money, which is what the BIS-led Project Agorá is testing. Stablecoins already move freely between any wallets on a chain, which is their main advantage and their regulators' main worry.

Every live service above is a closed loop: HSBC's runs between HSBC clients' wallets, Citi's across Citi branches, JPMD between JPMorgan clients. That covers intra-group treasury, which is a real use case, but a payment from an HSBC client to a Citi client still has to settle between the two banks somewhere.

Project Agorá is the central-bank answer. Run by the BIS with the Bank of England, the New York Fed, the Bank of France, the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank and, since May 2026, the Bank of Canada, plus over 40 private firms, it puts tokenised central bank reserves and tokenised commercial bank deposits on one platform. On 27 May 2026 the BIS reported that the prototype achieved atomic, all-or-nothing settlement across currencies and jurisdictions, and said work will move to real-value testing. The BIS's 2025 Annual Economic Report argued that stablecoins fall short on "singleness, elasticity and integrity" and set out this unified-ledger model as its preferred path.

Public-chain stablecoins already interoperate by default. On Stellar, USDC, EURC and other assets trade on the built-in order book and in Aquarius pools, and anchors connect them to bank accounts (see Stellar anchors explained). The same openness that makes this easy is what banks and the BIS distrust.

Why banks prefer deposit tokens

Deposit tokens keep money on the bank's balance sheet, where it funds loans, rather than moving into a stablecoin issuer's reserve of Treasury bills. They also let banks pay interest, reuse their existing compliance, and keep regulatory treatment unchanged.

• Funding. Every dollar that moves into a stablecoin leaves a bank's deposit base. The Treasury Borrowing Advisory Committee's April 2025 presentation flagged transactional deposits, which already pay little interest and move easily, as most at risk, and cited a projection that stablecoins could reach about $2 trillion by 2028. Total stablecoin supply was about $311 billion on 2 October 2026, per DefiLlama, so that projection is far from realised (see the stablecoin market in 2026).
• Interest as a competitive weapon. Banks can pay on deposit tokens; stablecoin issuers cannot.
• Regulatory continuity. A deposit token is supervised like any deposit, so it needs no new licence.
• Control. Permissioned access means every holder is a known client, which simplifies sanctions and anti-money-laundering compliance.

The cost is reach. A deposit token is only as useful as the network of clients who can accept it, while a stablecoin can be sent to anyone with a wallet on a supported chain.

What this means on Stellar

None of the three live deposit-token services runs on Stellar, and none is open to retail users. For anyone using Stellar DeFi, stablecoins remain the dollar and euro on the network, and the tokenisation that is happening there is of funds and Treasury products rather than bank deposits.

Stellar's stablecoin base is led by Circle's USDC, about $341M on the network as of 2 October 2026 per DefiLlama, and by Ondo's yield-bearing USDY, about $536M. USDY is a tokenised note rather than a deposit or a payment stablecoin, which is another reminder that the labels describe legal structure, not what a token looks like in a wallet. The broader picture of funds and securities issued on the network is in RWA tokenization on Stellar.

The GENIUS Act also links the two worlds: it allows stablecoin reserves to be held "in tokenized form" provided they comply with applicable law. A future stablecoin could therefore be backed partly by tokenised deposits or tokenised money-fund shares. Whatever the backing, the user-side questions are the same: who owes you the dollar, what stands behind that promise, and how quickly you can get out. DeFi risks covers the rest of that checklist, and the Stellar DeFi guide shows where stablecoins are used on the network.

The takeaway

Tokenised deposits and stablecoins solve different problems. Deposit tokens modernise how banks move money for their own clients and can pay interest, but stay inside bank networks. Stablecoins are open, fully reserved and interest-free, and work anywhere a wallet does. For now, institutions are adopting deposit tokens while public-chain DeFi, including on Stellar, runs on stablecoins.

Sources: GENIUS Act, Public Law 119-27; J.P. Morgan Kinexys announcements (24 June 2025, 12 November 2025, 28 April 2026); HSBC press releases (Hong Kong launch; US expansion, 13 April 2026); Crowdfund Insider on Citi Token Services (30 September 2026); BIS press release on Project Agorá (27 May 2026) and Annual Economic Report 2025, chapter III; Orrick summary of FDIC Chairman Hill's remarks (11 March 2026); Treasury Borrowing Advisory Committee presentation (30 April 2025); DefiLlama stablecoins API (2 October 2026).