The Coming Collision: Stablecoins, Tokenized Deposits, and the Fight for the Settlement Layer
Stablecoins processed $46 trillion in 2025. Traditional global payment systems processed $2,000 trillion.
That’s 2 percent. And that 2 percent terrifies banks.
Because it came from zero in less than a decade. Because it grew 106 percent year over year. Because it happened without banks in the loop.
This was the energy at Money20/20. Every booth. Every panel. Every hallway conversation. Everyone was asking the same thing: What do we do about stablecoins?
Five years ago, these same banks were quietly erasing blockchain press releases. Now they’re putting bank money on public chains.
JPMorgan’s launch of JPMD on Base made the shift impossible to ignore.
Banks aren’t trying to outrun stablecoins. They’re trying to prevent stablecoins from becoming the new settlement layer.
So they’re responding with their own version of on-chain money: tokenized deposits.
The market still treats these as fringe experiments. They’re not. They’re the opening move in a much bigger fight over the future of settlement.
How Stablecoins Hit Escape Velocity
Stablecoins became the fastest-growing financial rail in history for a few simple reasons.
Lower friction A stablecoin transfer settles in seconds, globally, for pennies.
Twenty-four seven liquidity No cutoff times. No weekends. No holidays.
Composability Money that can plug into any smart contract or application.
Ubiquity They move across dozens of chains and thousands of wallets.
Market trust They behave like digital cash. People understand the UX even if they don’t understand the cryptography.
But the real catalyst was this:
A Filipino nurse in Dubai can send money home in minutes Not hours. Not days. Not with 8 percent fees. Not with mystery delays. Not with intermediaries freezing transfers.
Stablecoins solved a real problem for real people before institutions even noticed they existed.
That’s why stablecoins hit 2 percent of global flow while banks were watching from the sidelines.
Why That 2 Percent Terrifies Banks
Banks own the remaining 98 percent of global money movement.
That 98 percent funds their balance sheets. Supports their fees. Sustains their control over settlement. Keeps corporate and government clients locked into traditional rails.
Stablecoins didn’t eat the world. They ate the parts where banks were weakest:
- underserved corridors
- high-fee remittances
- trading liquidity
- twenty-four seven markets
- on-chain primitives
- developer ecosystems
Stablecoins exposed the gap between what money should do and what legacy rails can do.
If stablecoins ever move from 2 percent to 10 percent, the settlement layer starts to shift outside the banking system. And at current growth rates, that happens in less than three years.
Once settlement shifts, control shifts. Banks won’t let that happen.
The Institutional Response: Tokenized Deposits
Tokenized deposits are commercial bank money issued on chain.
They behave like deposits. They’re regulated like deposits. They’re insured like deposits. They sit inside the banking perimeter.
The only difference is the rail.
When you fractionalize bank money and issue it on chain, you unlock:
- instant settlement
- programmable transactions
- atomic swaps
- on-chain collateral
- shared ledgers
It’s the same logic that made stablecoins powerful, translated into a bank-controlled environment.
Examples:
- JPM Coin processed hundreds of billions before going public chain
- JPMD is now live on Base for twenty-four seven settlement
- Citi Token Services is piloting programmable cross-border liquidity
- Partior is testing multi-bank settlement in Asia
- Fnality is building tokenized settlement backed by central bank reserves
This isn’t innovation theater anymore. This is production money movement by the world’s largest financial institutions.
Why JPMD on Base Is a Line in the Sand
JPMorgan didn’t launch JPMD on their own private chain. They launched on Base, a public blockchain with crypto-native liquidity and Coinbase as the distribution channel.
JPMD brings:
- twenty-four seven instant settlement
- direct claims on JPMorgan
- full on-chain programmability
- acceptance as collateral on Coinbase
- multi-chain expansion coming in dollars and euros
This is the first time a global bank issued regulated bank money on a public blockchain.
This wasn’t a pilot. This wasn’t a PDF. This wasn’t a lab environment. This is live in production.
Banks aren’t exploring blockchain. Banks are entering the arena.
The Fragmentation Problem
For years, banks built their own chains or ledgers:
- JPM Coin
- Citi Token Services
- Partior
- Fnality
All powerful. All private. But none of them connect.
Billions in liquidity, trapped in silos. The exact problem stablecoins solved by being open from day one.
If banks stay isolated, tokenized deposits won’t scale. The liquidity won’t move. The networks won’t grow. The system won’t work.
Interoperability Is the Real Battleground
The DBS and JPMorgan Kinexys announcement was the first serious attempt to connect these islands.
For the first time, there’s a framework to move tokenized deposits across multiple blockchains.
This is financial intranets discovering the power of shared protocols.
We’ve seen this story before:
- intranets didn’t beat the internet
- private messaging networks didn’t beat email
- walled gardens didn’t beat TCP/IP
Open standards win because they connect everyone.
Tokenized deposits won’t work at scale without:
- bank-to-bank interoperability
- chain-to-chain interoperability
- bank-to-stablecoin interoperability
- integration with RTGS systems
- liquidity routing across open and closed systems
Interoperability isn’t optional. It’s survival.
The institutions that embrace it will lead the next generation of financial infrastructure. The institutions clinging to isolation will be left behind.
What Happens Over the Next Five Years
Here’s where we’re headed:
1. Stablecoins keep dominating retail and open ecosystems They behave like digital cash and thrive in permissionless environments.
2. Tokenized deposits become the default for institutional settlement Large corporates and banks settle trillions on shared ledgers.
3. Hybrid models emerge Stablecoins backed by tokenized deposits. Tokenized deposits that behave like stablecoins. Lines blur fast.
4. Interoperability becomes the standard Rails connect. Liquidity flows. Everything talks to everything.
5. The real power shifts to whoever controls the bridges Routing. Liquidity. Finality. Access.
That’s where the leverage is.
The Real Question
The fight isn’t stablecoins vs tokenized deposits. It isn’t public vs private. It isn’t crypto vs banking.
The real question is this:
Who controls the bridges when everything goes on chain?
That’s where the power sits. That’s where the margins are. That’s where the future is.