Very short update on the basic differences for the non-payment geeks

The three core constructs of digital value —CBDCs, Stablecoins, and Tokenized Deposits—represent have various degrees of support from banks, central banks, businesses and regulators. Each has different risk and control points.

Deconstructing the Digital Dollar Constructs

These three constructs are differentiated primarily by who issues them, what blockchains they run on and where they sit on the balance sheet, which fundamentally determines their risk profile and regulatory oversight.

Construct	Issuer & Control	Balance Sheet Impact	Primary Regulation & Oversight
Central Bank Digital Currency (CBDC)	Central bank (e.g., Federal Reserve, MAS)	Liability of the central bank	Directly controlled by the central bank and monetary policy
Payment Stablecoin (SC)	Regulated private entities (non-banks or ring-fenced bank subsidiaries)	Explicitly not a bank liability; backed 1:1 by segregated reserves of high-quality liquid assets (HQLA)	The GENIUS Act sets the U.S. federal regulatory framework, mandating 1:1 reserves and prohibiting the payment of interest to the holder. Oversight typically falls under banking regulators like the OCC or the Fed
Tokenized Deposit (TD)	Commercial banks	Direct liability on the bank’s balance sheet; integrated into the fractional reserve model	Existing commercial banking regulation, benefiting from FDIC insurance

CBDCs (Wholesale CBDCs, or wCBDCs, and Retail CBDCs) are liabilities of the central bank, intended to be risk-free money. For instance, MAS supports CBDCs issued by the MAS, classifying them as either retail (accessible by the public) or wholesale (restricted to financial institutions for large-value settlement). Experiments like Project Mariana show central banks, like the Bank of France and Swiss National Bank, manage access to wCBDC via whitelists and operate bridges to control the transfer of the wCBDC between domestic platforms and international networks. (more in last section below).

Payment Stablecoins (SCs) are designed to be digital assets that represent a claim on the issuer for redemption, rather than a tokenized bank deposit. U.S. stablecoin legislation, like the GENIUS Act, has introduced a federal framework that requires these coins to be fully backed 1:1 by highly liquid assets, such as U.S. dollars (including deposits at a Federal Reserve Bank or demand deposits at a U.S. Insured Depository Institution) or short-term U.S. Treasuries. Critically, the Act explicitly forbids the payment of interest or yield to stablecoin holders, which acts as a powerful shield for the existing banking deposit franchise.

Tokenized Deposits (TDs), sometimes referred to as Tokenised Bank Liabilities (TBLs) (as in Singapore’s Orchid Blueprint), are tokens issued by licensed banks that represent a general claim against the bank, backed by the issuing bank’s balance sheet. TDs are essentially the bank’s defensive evolution: they leverage DLT for speed and programmability while keeping the funds firmly within the commercial bank’s fractional reserve model, preserving low-cost deposits.

Tokenized Deposit Example JPM Dollar (JPMD),

JPM’s TD  model adopted is an evolutionary approach that utilizes Distributed Ledger Technology (DLT) while preserving the core structure of commercial banking.

• Nature and Status: JPMD is a tokenized deposit (or deposit token), which is a digital representation of a customer’s commercial bank deposit. Unlike payment stablecoins, the funds backing JPMD remain a direct liability on the bank’s balance sheet. Because it is structured as a bank deposit, it can potentially pay interest and is eligible for FDIC insurance.
• Operational Environment: JPMD is issued on permissioned blockchains (ie closed network of permissioned parties) controlled by the bank, such as the Kinexys platform. Although J.P. Morgan has conducted a proof of concept for JPMD on a semi-public network (Base), it is strictly a permissioned digital USD that is only usable by whitelisted institutional clients.
• Primary Use Case: The tokenized deposit is designed for wholesale transaction settlement and B2B payments. It facilitates programmable, near real-time, multicurrency payments for large corporate and institutional clients, especially for cross-border flows.
• Performance: The platform offers extreme efficiency, enabling transactions with near-instant settlement, transaction costs under 1 cent, and latency measured in sub-seconds. Kinexys has processed substantial commercial volume, moving approximately $3 billion per day and exceeding $1.5 trillion in total transaction volume.

TD allows JPM to perform real-time settlement and programmability, among TRUSTED COUNTERPARTIES, without disrupting its core funding model or sacrificing its role as a regulated financial intermediary. This “trust network” provides motivation for suppliers to open an account with JPM and further entrenches JPM as the centralized settlement entity. 

The “trusted counterparty” nature of TD should probably be a subject to another blog, as most FIs are moving away from operating on public blockchains, as sensitive data should only be available to the parties in a transaction. Thus we see Stripe and Tempo, and other FI driven blockchains emerging. Thus some stablecoins, and most TDs run on only some of the blockchain networks. The Smart Contracts underlying the stablecon also vary, with Solana’s token 2022 Spec as gaining the most traction with its Permanent Delegate that allows for reversal of stablecoin transactions. 

By contrast, stablecoins are not bank liabilities and may be issued by both banks and non-banks. They reside on public blockchains. Here banks play a switching role (see blog). 

Not an “either or” – Client Demand

For banks, the three digital constructs are not an either/or choice; they will support what the clients want, strategically positioning themselves as the necessary trust layer and network hub for all forms of digital cash.

• Tokenized Deposits fit with commercial banking and treasury needs by enabling interbank transfer, but stablecoins can also achieve this. Both TDs and SCs fundamentally aim to solve settlement friction by providing 24/7, instant transfer capabilities. Tokenized Deposits, by remaining a bank liability, best serve a bank’s treasury and commercial client needs because they preserve the bank’s core liability base. However, stablecoins are now driving substantial B2B contract growth, with B2B payments representing approximately $36 billion of stablecoin volume as of early 2025.
• J.P. Morgan’s Kinexys is the leading player, reshaping how financial markets and B2B settlement. J.P. Morgan’s Kinexys platform, the successor to Onyx, is a prime example of a commercial bank taking the lead. Kinexys operates a permissioned blockchain platform utilizing tokenized deposits (like JPMD) for institutional settlement. The token, JPMD, is explicitly a permissioned digital USD usable only by whitelisted institutional clients, which combines the speed of blockchain with the control and compliance of traditional finance. This demonstrates how banks are applying DLT to enhance efficiency in financial settlement and liquidity management. With JPM using it to further their role as the centralized HUB for all settlement. 
• Banks control the governance and rules. While DLT provides the technical facility for managing immutable assets, the necessary trust and compliance in institutional finance are still managed within multi-party legal agreements, financial market licenses, and regulatory enforcement. Regulated stablecoins rely fundamentally on centralized trust in their issuer. 
• Platforms like Kinexys and initiatives like Singapore’s Orchid Blueprint, which supports Orchid Compatible Ledgers (OCLs), ensure that necessary checks for AML/CFT are implemented, making permissionless networks unsuitable for regulatory requirements. This governance and compliance strength positions banks to dominate stablecoin issuance, often through consortiums, to solidify their collective market position.

CBDCs – Central Banks Control

Central Bank Digital Currencies (CBDCs) are a direct, central bank-driven response to the rapidly evolving digital money landscape, fundamentally aimed at preserving monetary sovereignty and control. 

Where a stablecoin operates on a an open or semi-private blockchain with a regulated issuer minting “private money”, CBDCs are centralized and don’t require a blockchain at all. They are legal forms of tender; digital versions of a nation’s fiat currency, issued and backed directly by the central bank. Unlike privately issued stablecoins, CBDCs are designed to maintain control over the money supply, monetary policy transmission, and currency demand, which can be impaired if economic activity shifts significantly to foreign-denominated digital currencies. CBDCs are centrally controlled and can embed monetary policy logic, such as expiration or negative rates, supporting real-time tax collection and anti-money laundering monitoring.

A primary motivation for central banks pursuing CBDCs is to address the threat of dollarization, where individuals and businesses in foreign countries increasingly use U.S. dollar-backed stablecoins (like USDC or USDT) instead of their local fiat currency for payments and savings. This digital dollarization accelerates because stablecoins make dollar access instant and frictionless via mobile wallets and digital rails, bypassing the friction of traditional dollarization. The ECB, for instance, has warned that unchecked U.S. dollar stablecoins could pose a greater threat to Europe than trade tariffs, fearing they could reroute European savings into U.S. debt and undermine the Eurozone’s sovereignty.

This CBDC-first strategic effort is most pronounced in Asia. Central banks across the region are taking a proactive role in shaping digital finance to address the threat of big tech and dollarization (ie think dollar denominated Oil Contracts – the petro dollar expanding to all commerce). China is the clear leader, with its digital yuan (eCNY) well into national-scale pilots, accepted across transit, retail, and government services. Other nations, including India, are also actively developing CBDCs to improve financial inclusion and reduce reliance on physical cash, while expressing concern that foreign stablecoins could interfere with domestic monetary transmission and capital flow regulation.

Asia’s coordinated push for CBDCs reflects a desire to build parallel infrastructure that is not exposed to U.S.. Monetary officials in the region have voiced concerns that U.S. sanctions in response to geopolitical events, such as the war in Ukraine, demonstrated the power of the US into “availability” of dollar-based systems, reinforcing fears that national economies could be impaired by foreign policy rather than just market forces. 

Projects like mBridge—a multi-CBDC cross-border initiative led by the central banks of China, Thailand, UAE, and Hong Kong—exemplify Asia’s focus on digital sovereignty, ensuring local control over currency issuance, usage, and interoperability. This regional CBDC strategy stands as a clear counterpoint to the U.S.’s explicitly pro-stablecoin stance.