Regulators outside the United States, led by the Bank of England, signalled this week that they favour tokenised bank deposits instead of stablecoins for the future of digital finance. That view emerged in a report by JPMorgan analysts on July 18, 2025.
They cited comments from Bank of England Governor Andrew Bailey, who said he would rather see banks issue tokenised deposits than enter the stablecoin market. The analysts say this preference may reflect a broader international trend.
What Are Tokenised Deposits?
Tokenised deposits are bank deposits recorded on a blockchain. They enjoy the same protections as regular deposits, including deposit insurance and lender of last resort support.
At the same time, they gain programmability and can interoperate with other blockchain services.
There are two type of tokenised deposits, one Bearer tokenised deposit functions like stablecoins because they can be transferred between holders.
The other one is Non-bearer tokenised deposits that settles directly between banks and cannot be passed from person to person.
Regulators Back Non-Bearer Model
JPMorgan’s team said regulators are likely to support non-bearer tokenised deposits more than bearer kind.
The non-bearer model preserves the singleness of money by ensuring every transfer uses central bank funds at face value. This core principle means that different forms of money remain interchangeable at par.
Also Read: JPMorgan, Bank Of America, Citigroup & Wells Fargo Discuss Co-Owned Stablecoin Initiative
Analysts pointed to failures like Terra, FTX and Silicon Valley Bank as examples of what can happen when tokens lose their peg. In each case, a drop in confidence or access to reserves caused sharp price swings.
That risk is lower with non-bearer deposits because settlements always clear at full value. Regulators see this as vital for maintaining trust in digital money.
Even with the regulatory tilt, stablecoins remain the most liquid digital assets. They trade freely between wallets and on exchanges without bank intermediation.
JPMorgan’s report noted that reserves for stablecoins often flow back into short-term treasury bills and money market funds. This keeps funds within the broader financial system even as they leave bank deposits.
Bank Issuance Challenges
The analysts also raised doubts about proposals for banks to issue stablecoins.
A Bank of England paper from 2023 suggested banks might have to hold central bank reserves equal to their stablecoin balances without earning interest. That rule would make stablecoin issuance less appealing.
Banks could lose yield on customer deposits if they must park 100% of those funds at the central bank.
U.S. Policy Divergence
In the United States, policy is moving in the opposite direction. President Donald Trump is poised to sign the GENIUS Act, which would clear a path for banks to issue stablecoins and encourage their use in payments.
That landmark bill requires stablecoin issuers to meet anti‑money‑laundering rules and submit to regular reserve audits. It represents a major step toward integrating stablecoins into the American payments system.
Digital Gold Under Pressure
In a related note, other JPMorgan analysts recently argued that Bitcoin’s appeal as digital gold is under threat.
They pointed out that high volatility and a growing link with equity markets cast doubt on Bitcoin’s reliability as a store of value. Meanwhile, physical gold has seen rising demand as investors seek stability.
The debate between tokenised deposits and stablecoins highlights a divide in global regulatory thinking. Outside the United States, authorities seem to prize the safety features of deposits backed by traditional banks.
Also Read: JP Morgan Expands Blockchain-Based Kinexys Digital Payments With GBP Support
