According to JPMorgan, global regulation is shifting toward tokenized deposits as a safer alternative to stablecoins.
Tokenized Deposits as an Alternative to Stablecoins
Bank of England Governor Andrew Bailey noted that he would prefer banks to create tokenized central bank deposits rather than new private stablecoins. JPMorgan believes this is part of a broader regulatory wave toward tokenized deposits, which offer a safer and more modern approach to finance.
Types of Tokenized Deposits
JPMorgan analysts highlight two types of tokenized deposits: bearer and non-bearer. Bearer tokenized deposits may be transferred and traded among parties, but their value can fluctuate based on supply and demand. Non-bearer tokenized deposits, on the other hand, are non-transferable and facilitate direct settlement of transactions in central bank money.
Stablecoins and Regulation
Despite increasing regulation, stablecoins remain popular due to their high liquidity and universal availability. JPMorgan reports that stablecoins typically do not take money away from the banking system, as their reserves usually stay within traditional financial channels.
From JPMorgan's perspective, the shift toward tokenized deposits could lead to greater regulation and security in finance compared to the use of stablecoins.
