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The centre of gravity in on-chain money is shifting, after two years in which stablecoins dominated discussion, volumes and investor attention.
Tokenised deposits are stealing stablecoins buzz
2026 is shaping up as the year when tokenised bank deposits quietly take the institutional lead — not by displacing stablecoins, but by outgrowing them where scale, regulation and economics matter most.
From stablecoin boom to structural limits
Stablecoins enjoyed an exceptional run.
Transaction volumes surged, annual transfers climbed into the tens of trillions of dollars and, for a period, on-chain dollar flows rivalled those of card networks.
High interest rates supercharged the model, allowing issuers to monetise reserve balances while keeping user-facing fees close to zero.
That backdrop is now fading.
Expectations of lower short-term rates threaten the economics of reserve-driven revenue models, while regulation is tightening.
Frameworks such as Europe’s MiCA regime and emerging US legislation are converging on a clear principle: payment stablecoins should behave more like e-money than lightly regulated investment products.
One-to-one backing, limits on yield usage and higher compliance costs are compressing margins and narrowing strategic options.
For non-bank issuers, this creates a fork in the road. Growth increasingly depends on explicit fees, spreads or ancillary services layered on top of the core token — a harder sell in high-volume, low-margin institutional flows.
Why banks have the advantage
Banks face no such reinvention problem. Tokenised deposits are not new money; they are existing commercial bank deposits represented on blockchain rails.
The legal status, supervision and balance-sheet treatment remain unchanged, but the functionality improves dramatically: programmability, 24/7 settlement and interoperability with smart contracts.
Crucially, banks do not need to monetise tokenisation transaction by transaction.
Deposits already underpin lending, FX, payments and cash management.
Tokenisation extends those economics into an always-on environment without forcing banks to extract margin from every movement of funds.
That difference matters at scale. Wholesale banking networks already process trillions of dollars daily.
Tokenised deposits simply make those flows faster and more flexible, while staying embedded in relationship-based economics that institutional clients understand and trust.
From pilots to production
What was theoretical a year ago is now live infrastructure. Citi has integrated tokenised deposits into its 24/7 USD clearing operations, allowing institutional clients to move funds across jurisdictions in near real time.
HSBC has launched a tokenised deposit service aimed squarely at corporate treasury use cases. JPMorgan Chase has gone further, developing dollar-denominated deposit tokens on its Kinexys platform, backed directly by its balance sheet.
In each case, the emphasis is on continuity, not disruption.
The systems mirror existing account structures, KYC standards and risk controls — features CFOs and treasurers see as strengths, not constraints.
Where stablecoins still fit
Stablecoins are not disappearing. They remain well suited to retail payments, crypto-native ecosystems and public-chain applications where open access outweighs balance-sheet integration.
But for institutional, low-margin, system-scale flows, tokenised deposits are emerging as the preferred on-chain dollar.
The decisive factor is not hype or headline volumes. It is the ability to deliver programmability without forcing institutions to abandon the legal, regulatory and economic frameworks they already rely on.
In on-chain finance, continuity is becoming the killer feature — and banks are best placed to supply it.
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