JPMorgan: Regulators outside the U.S. prefer tokenized bank deposits over stablecoins

ChainCatcher news, according to The Block, JPMorgan analysts indicate that regulators outside the United States, including the Bank of England, are favoring tokenized bank deposits over stablecoins. The reasons include that the former can be settled at face value, have deposit insurance, KYC/AML compliance, and other traditional financial protections, while also possessing blockchain programmability and interoperability.

The bank's managing director Nikolaos Panigirtzoglou pointed out that non-anonymous tokenized deposits are preferred for ensuring "monetary singularity," whereas stablecoins face issues of credit risk and price deviation, as evidenced by the crises of Terra, FTX, and Silicon Valley Bank.

Nevertheless, analysts acknowledge that stablecoins still dominate the crypto ecosystem due to their high liquidity and ease of transfer, adding that stablecoin funds have not left the banking system and often flow back in the form of government bonds.

Meanwhile, U.S. President Trump is set to sign the GENIUS Act, which will grant banks the legitimacy to issue stablecoins, and JPMorgan is also testing its tokenized deposit solution, JPMD, on a Layer-2 network and has submitted a trademark application.