Until recently, the central debate in banking was which form of digital money would prevail: stablecoins or tokenized deposits. Stablecoins are cryptocurrencies designed to maintain a stable value, typically through a one-to-one peg with a fiat currency — overwhelmingly the US dollar. The US government is keen to reinforce that dominance, in part through the GENIUS (Guiding and Establishing National Innovation for US Stablecoins) Act enacted last year.

Tokenized deposits also use blockchain technology but represent existing bank deposits as digital tokens. Banks have generally favored them because they keep deposits within the banking system, fit established regulatory frameworks, and provide the same protections as conventional deposits.

Rather than choosing between stablecoins or tokenized deposits, leading banks are developing capabilities in both. In July 2025, Chairman and CEO of JPMorgan Chase, Jamie Dimon, reiterated his skepticism about stablecoins, saying he didn’t see why customers would use them. Yet, he also confirmed the bank was building its own deposit coin and a stablecoin “to understand it, to be good at it.”

“In other words, Dimon may not believe that stablecoin has a future but is not willing to bet the franchise on being right about that,” says Arjun Vir Singh, Partner and Global Head of Arthur D. Little’s (ADL’s) Financial Services practice. “For him, the risk of losing deposits and fee income to whichever rail the market chose is simply too great, so he sensibly chooses to be on both.”

That approach has been adopted across the banking sector. J.P. Morgan, Bank of America, Citigroup, and more than a dozen other major banks are building a shared tokenized deposit network through their jointly owned clearing house, The Clearing House. Some of the same firms have also joined the Open USD consortium to launch a dollar-denominated stablecoin that some believe could become widely adopted.

The same logic is being applied at a global scale. In July, Swift, the bank-owned network linking more than 11,500 financial institutions, launched its own blockchain-based shared ledger. Seventeen banks across six continents, including Citigroup, HSBC, First Abu Dhabi Bank (FAB), and Singapore’s DBS Bank, are piloting 24/7 cross-border payments using tokenized deposits while settling transactions through existing bank rails. That allows existing compliance and regulatory controls to remain in place. Built in just nine months, the platform directly challenges the stablecoin industry’s claim that only crypto rails can move money around the clock.

Increasingly, financial services have come to treat different forms of digital money as complementary layers within a broader payments ecosystem, each serving distinct users and use cases. That shift helps explain why leading banks are positioning themselves across multiple platforms instead of betting on a single digital money model.

Technology has helped. One of the strongest criticisms of tokenized deposits was that they lacked the flexibility and interoperability that made stablecoins attractive. That is no longer true: tokenized deposits are now connected to broader digital asset networks, breaking out of their former silos.

Central banks have shifted, too. Initially wary of Bitcoin’s anti-establishment origins, they have since embraced blockchain technology, provided it operates within regulated financial systems. Around the world, regulators agree that digital money must be accommodated within the financial system, even if they are taking different routes to get there.

In the US, the GENIUS Act sought to establish a regulatory framework for stablecoins, while the Digital Asset Market Clarity Act is intended to resolve broader questions around digital assets. One of the most contentious issues is whether stablecoins should be permitted to pay yields. Policymakers fear that, if they do, customers could shift investment balances out of conventional bank deposits. The current compromise would prohibit interest on idle balances while allowing intermediaries to offer activity-based rewards.

The United Arab Emirates (UAE) has moved quickly. In February, DDSC, a dirham-backed stablecoin licensed by the Central Bank of the UAE (CBUAE), went live on locally built blockchain infrastructure. Initiated by International Holding Company (IHC) and FAB, it is already being used for institutional payments, settlements, and trade flows.

Europe is pursuing a similar strategy. The Qivalis euro stablecoin consortium now includes 37 banks, including BNP Paribas, ING, and UniCredit. Meanwhile, the European Commission is reviewing its MiCA (Markets in Crypto-Assets) regulation, while the European Central Bank (ECB) hopes to launch a digital euro by 2029. Under current plans, only European firms will be permitted to build or operate the underlying infrastructure.

The UK Financial Conduct Authority (FCA) is taking a different approach, bringing crypto activity within the existing financial services framework, while the Bank of England continues to explore a digital pound.

Despite these differing regulatory approaches, a common market structure is beginning to emerge.

Stablecoins look set to dominate consumer payments, cross-border transfers, and digital asset markets. Tokenized deposits, meanwhile, have staked their claim in corporate treasury management, institutional settlement, and commercial banking. This is the new architecture of global money, one widely seen as resembling a multilayered technology stack. Where once there were siloed, bank-controlled systems, there will now be a programmable, multilayered, multi-rail payments stack akin to the internet.

“Various types of digital money and assets sit at different levels and interact with each other. No single institution will own this new monetary infrastructure, but whoever controls the key layers will have enormous power,” explains Singh.

The question is no longer which financial instrument will win, but where in the stack each bank should compete. The answer will differ for a G-SIB, a digital-native bank and a traditional lender. But all face the same risk: choosing the wrong networks, or waiting too long, could leave them operating within ecosystems built by others.

Banks considering stablecoins face four pathways. The first is to issue a proprietary stablecoin, accepting balance sheet and reputational risks in exchange for potential first-mover advantages in customer relationships, merchant acceptance, and ecosystem integration.

The second is to join a consortium, pooling scale and credibility with peer banks for scenarios where no single institution has sufficient distribution to go it alone. The most prominent example of this approach so far is Open USD.

The third is to distribute someone else’s stablecoin and find a niche elsewhere in the ecosystem: providing custody wallets, for instance, since few retail customers want to transact directly on a blockchain.

The fourth is to wait, but only briefly. Fluid interoperability standards may justify another year of observation, but delay becomes riskier as networks and standards consolidate.

Non-G-SIB institutions are increasingly securing approval for their own stablecoins. They include RAKBank and Zand in the UAE, the US payments firm Fiserv, and mid-tier banks in Brazil, Argentina, and South Korea preparing local-currency issuance. Stablecoins are not just a defensive play but a powerful tool for growth and customer acquisition.

Far fewer organizations will likely succeed as issuers than current market hype implies. A likely market consolidation is probable within three years. History suggests that only a handful of platforms will acquire the liquidity, acceptance, and network effects needed to endure. And the reality is that before launching a stablecoin solo, a bank should frame an exit strategy should things go awry.

If stablecoins present one set of strategic choices, tokenized deposits pose a different challenge.

Tokenized deposits require a different calculus. A small cluster of institutions, including J.P. Morgan, Citigroup, and Bank of America, have the balance sheets and cross-border franchises to justify proprietary infrastructure. For them, the key decision is how open those networks should be. Closed networks preserve pricing power and customer ownership; open networks generate stronger network effects. J.P. Morgan’s collaboration with The Clearing House suggests that even the industry’s largest banks recognize the value of shared infrastructure.

For regional G-SIBs, national champions, and the thousands of commercial banks below them, proprietary infrastructure is rarely a viable option. Capital requirements are too high, network effects accrue too slowly, and standards are still evolving. The challenge is deciding which network to join, and when — whether The Clearing House’s forthcoming network, Swift’s shared ledger, or J.P. Morgan’s Kinexys.

Waiting for universal standards to emerge is rarely a winning strategy. Standards tend to be shaped by early participants, with late arrivals inheriting frameworks designed by others. Firms should resist the temptation to remain platform-agnostic indefinitely: customers increasingly expect interoperability, and perpetual flexibility can spell paralysis.

The right approach is to balance commitment with connectivity, establishing a strong position before the market consolidates around a handful of dominant networks.

The future will not be defined by a single winning technology. Multiple forms of digital money will coexist. But competitive advantage will accrue to institutions that make deliberate, early choices about infrastructure, partnerships, and network participation.

Companies that move strategically now will help shape the system; those that delay may find themselves operating inside an ecosystem built entirely by others. Ultimately, the institutions that secure the most valuable position in tomorrow’s payments infrastructure — not necessarily those backing a single winning technology — will define the next era of banking.