On July 19, PANews reported that JPMorgan analysts stated that regulators outside the U.S., including the Bank of England, seem to prefer tokenized bank deposits over stablecoins, as these two models compete for future dominance in the digital finance sector. JPMorgan Managing Director Nikolaos Panigirtzoglou and other analysts cited recent remarks by Bank of England Governor Andrew Bailey, who expressed a preference for banks to offer tokenized deposits rather than issuing their own stablecoins. This may indicate a general preference among overseas regulators.
Tokenized deposits refer to commercial bank deposits recorded on blockchain infrastructure. Analysts point out that they retain the protections and support of traditional deposits, such as deposit insurance, capital requirements, lender of last resort support, and compliance with anti-money laundering/know your customer (AML/KYC) rules, while also offering programmability and blockchain interoperability.
Tokenized deposits can be divided into two forms: bearer deposits (transferable, like stablecoins) and non-bearer deposits (non-transferable, settled at par in interbank transactions). Analysts indicate that regulators are more likely to support the non-bearer version of currency, as it helps maintain 'currency singularity'—a core principle of the financial system that ensures different forms of currency can be exchanged at par. On the other hand, bearer tokenized deposits and stablecoins may deviate from their peg levels due to market factors such as credit risk or liquidity imbalances. They noted that this was evident in past crises involving Terra, FTX, and Silicon Valley Bank.
