Private Money Goes Digital: The Strategic Choice Between Stablecoins and Tokenised Deposits

Introduction

Commercial bank money is being rebuilt in digital form, and banks now face a genuine choice about which version of it to build. Stablecoins and tokenised deposits both promise programmable, always-on settlement, and both are moving from pilot to production faster than most institutions‘ internal roadmaps anticipated.

But they are not two flavours of the same idea. Stablecoins sit outside the regulated deposit-taking relationship between bank and customer while tokenised deposits do not leave that relationship. That difference shapes everything else: who can issue, what backs the token, whether it competes with a bank’s own balance sheet or extends it, and which use cases each is suited for.

For banks and payments teams in the German-speaking region in particular, this is not an abstract debate. MiCAR has already drawn the regulatory lines for stablecoins in Europe, while German, Austrian and Swiss institutions are simultaneously building tokenised deposit infrastructure through initiatives like CBMT and Project Helvetia.

The question this article sets out to answer is not which technology wins, but which one fits which job, starting with the one that has drawn most of the regulatory attention so far: the stablecoin.

What is a stablecoin? A regulatory perspective

Under the European Markets in Crypto-Assets Regulation (MiCAR), stablecoins fall into two categories: e-money tokens (EMTs), which peg their value to a single official currency, and asset-referenced tokens (ARTs), which reference another value or right, or a combination of these, instead of a single currency. Only e-money institutions and credit institutions are permitted to issue EMTs, a restriction designed to keep issuance within regulated and supervised entities. When speaking of ‘stablecoins’ one usually refers to EMTs.

Balance sheet and legal position

The defining feature of a stablecoin, and the one that separates it most sharply from a tokenised deposit, is its legal nature: it represents a claim against the issuer, not a bank deposit. Holders have no recourse to deposit guarantee schemes, and issuers face reserve and liquidity requirements that differ substantially from those governing traditional deposits. MiCAR reinforces this separation further by prohibiting interest payments on stablecoins, precisely to prevent them from becoming a substitute for deposits.

Where stablecoins prove useful

The natural use cases for stablecoins include cross-border payments, crypto-native trading and settlement, programmable payments that operate independently of traditional banking rails, and interoperability with decentralised finance and wholesale DLT infrastructure. Cross-border remittances are frequently cited as the strongest case for stablecoin adoption, given that traditional channels remain expensive and slow, particularly for emerging markets and developing economies. However, of the roughly $35 trillion in annualised on-chain stablecoin transaction volume, only about $390 billion, or 0.02% of global payment volumes, represents genuine end-user payments, with business-to-business transactions making up the largest share at $226 billion, roughly 58%¹ of that total.

In fact, recent empirical evidence complicates this picture considerably. A mystery shopping exercise by Banca d’Italia² tested real-money transfers of 200 USDC, the second-largest stablecoin issued by Circle, across ten corridors linking Italy with Argentina, Brazil, South Africa, the UAE, and Japan, found no systematic cost advantage over conventional remittance channels. Total costs ranged from as low as 0.30% to nearly 9% of the transferred amount, depending entirely on the corridor. Crucially, the on-chain transfer itself was consistently the cheapest and fastest component of the process, averaging just 0.4% of the transaction value and settling in under fifteen minutes in most cases. The real costs and delays arose elsewhere: in converting fiat into stablecoins on the sending side, and stablecoins back into fiat on the receiving side, a pattern the literature terms the „stablecoin sandwich“.

Execution speed followed the same logic. Where the destination country had a well-functioning instant payment system, such as Brazil’s PIX or Europe’s TIPS, the entire transfer settled in under twenty minutes. Where the recipient depended on standard bank transfers, as in South Africa, settlement stretched to one or two business days, matching the timeline of conventional remittances and eliminating any speed advantage the blockchain layer might have offered. When using a stablecoin to transfer funds into another currency and country, the clear implication is that stablecoin efficiency is not an intrinsic technological property; it is bounded by the quality of the surrounding domestic payment infrastructure.

Strategic options for banks

Given this, banks face a genuine range of postures rather than a binary choice. They can issue independently, taking on the full reserve and compliance burden under MiCAR; integrate as a payment rail or wallet provider without issuing anything themselves; or deliberately opt out and focus resources elsewhere.

Increasingly, however, banks are choosing a fourth path: pooling resources in a consortium rather than doing it alone. Qivalis, an Amsterdam-based joint venture founded in September 2025 by Danske Bank, ING, KBC, and Raiffeisen Bank International, is the clearest example. It is now backed by 37 institutions (as of September 2026), including ABN AMRO, Rabobank, Nordea, BBVA, Banca Sella, BNP Paribas, CaixaBank, DekaBank, DZ Bank, SEB and UniCredit, and is seeking an e-money institution licence from the Dutch central bank to launch a MiCAR-compliant euro stablecoin in the second half of 2026³. For individual banks, this approach spreads both capital commitment and regulatory risk, whilst pooling the critical mass needed to offer a credible European counterweight to dollar-denominated stablecoins such as USDC or USDT.

The right choice among these postures depends on a handful of concrete criteria: the target customer base, time-to-market pressure, the scale of regulatory and compliance investment required, and how much capital the institution is prepared to commit to reserve holdings, whether alone or as part of a consortium.

What is a tokenised deposit? A balance-sheet perspective

If a stablecoin is a claim against its issuer that sits outside the deposit-taking relationship between bank and customer, a tokenised deposit is the mirror image: it never leaves that relationship at all. It isn’t a new financial instrument competing with the deposit, it is the deposit, given a digital, programmable form.

A tokenised deposit is a commercial bank deposit represented as a transferable token on a blockchain or DLT platform. Each token is a direct claim on a specific bank’s balance sheet, not on a separate reserve pool. A bank mints a token against a deposit a client already holds, locking the underlying balance; on redemption, the token is burned and the account credited, with the bank’s ledger and the blockchain record reconciled throughout.

The consequence follows directly from the mechanics: the money never leaves the issuing bank’s books. It remains a liability of a regulated, supervised institution, generally eligible for the same deposit insurance and regulatory protection as a normal account, and, crucially for the bank, the funds stay available for lending. That is the structural counterpart to the stablecoin picture above: where MiCAR keeps e-money tokens deliberately separate from deposit-taking and bars them from paying interest precisely to stop that substitution, a tokenised deposit was never at risk of becoming one in the first place, because it is one already. JPMorgan’s JPM Coin (JPMD), which moved into institutional rollout on Coinbase’s Base network in November 2025, remains the clearest global illustration of the concept in production.

Where the market stands, and how much of it is happening in the German-speaking (DACH) region

Global adoption is still early. As of mid-2026, only around 3.4% of the top 290 banks worldwide have live tokenised deposit capabilities, though it’s expected that figure reaches roughly 21% by mid-2027.⁴ The leaders are pulling well ahead of that average: JPMorgan’s Kinexys platform already processes more than $5 billion a day intra-bank, and Citi Token Services and HSBC’s expanding tokenised deposit offering show similar momentum. In the US, The Clearing House, backed by JPMorgan, Bank of America, Citi and Wells Fargo, is targeting a shared network for the first half of 2027, while a separate consortium of five regional banks is running its own pilot planned for the third quarter of 2026.

On 9 July 2026, Swift announced that its blockchain-based shared ledger is live, with 17 banks across six continents, including UBS, HSBC, Citi, BNP Paribas, DBS and Standard Chartered, beginning real pilot transactions. Swift is not issuing tokenised deposits itself; it has built a shared orchestration layer that lets banks move their own tokenised deposits across borders around the clock while final settlement still runs through existing correspondent-banking rails.^5,6 Because it builds on messaging infrastructure that more than 11,500 institutions already use, banks can connect far more easily than by joining a purely US- or UK-based consortium, and UBS’s presence among the pilot banks makes it directly relevant for Swiss institutions.

For German, Austrian and Swiss institutions, the momentum so far is wholesale and industrial rather than retail, and it runs on a genuinely separate, and in some respects more mature, track than the Anglo-American initiatives above. In Germany, the Deutsche Kreditwirtschaft’s Commercial Bank Money Token initiative, known domestically as the Giralgeldtoken or CBMT, has brought Deutsche Bank, Commerzbank, DZ Bank and Helaba together with industrial corporates including Siemens, BASF and Mercedes-Benz since late 2025, testing use cases such as delivery-versus-payment in supply chains and machine-to-machine payments. Deutsche Bank is separately building its own layer-2 infrastructure, DAMA 2, while the ECB’s Pontes and Appia initiatives are laying the public groundwork that private schemes like CBMT will eventually need. Switzerland has arguably the most mature public-private set-up of the three: the SNB and SIX’s Project Helvetia has settled real tokenised bond issuances against actual wholesale central bank digital currency in Swiss francs since 2024, including a CHF 200 million World Bank bond with Commerzbank as lead manager.⁷

Regulatory treatment lags the technology almost everywhere, with deposit insurance, capital and AML expectations for tokenised deposit networks still open even in the US, and no dedicated EU regime yet either. It is also worth being precise about scale: Citi’s projection of $100 to $140 trillion in annual tokenised deposit flows by 2030 describes potential, not current volumes.⁸

Use cases, and where banks should actually place their bets

The concrete use cases cluster around a handful of jobs. Real-time treasury and liquidity management is where the money is moving today: multinational corporates want to shift balances between entities and jurisdictions instantly and around the clock, rather than waiting on cut-off times and correspondent banks, and it’s the use case behind both Kinexys and Citi Token Services. Close behind is settlement for tokenised capital markets, where a tokenised deposit can act as the cash side of a trade that settles at the exact same moment as the security itself, removing the risk that one side pays before the other delivers.

Cross-border payments that bypass the correspondent-bank chain are being tested by wholesale projects such as Partior and Cari Network, and now by Swift’s shared ledger too.^8,9 For DACH banks, supply-chain and trade finance is the natural entry point rather than an afterthought, building directly on the CBMT pilot described above and on the industrial, export-oriented client base German, Austrian and Swiss banks already serve. Corporate wallets that automate payments, releasing funds only once agreed conditions are met, remain the most exploratory use case and are still largely confined to pilots. Retail use cases, by contrast, exist mostly as research tracks; the momentum in 2026 is institutional, and the UK’s more consumer-facing pilots around marketplace payments and remortgaging remain the exception rather than the rule.

That points to a fairly clear set of priorities. Connecting to existing infrastructure, such as the CBMT sandbox or Swift’s shared ledger, is a lower-effort starting point than building proprietary rails from scratch. Treasury and trade finance, where DACH banks already hold strong relationships with industrial and export-heavy clients, is a more defensible entry point than consumer payments. And regulatory ambiguity is better treated as something to plan around than a reason to wait, since capital, insurance and AML rules will keep evolving regardless of when a bank starts. UBS’s role in the Swift pilot and the SNB’s Project Helvetia are worth watching for exactly this reason: both connect tokenised deposits to infrastructure the market already trusts, rather than asking it to trust something new. The more pressing competitive risk in 2026 is not losing retail deposits to stablecoins but losing corporate treasury clients to banks that have already modernised their settlement rails.

Conclusion

Stablecoins and tokenised deposits answer different questions rather than competing for the same job: one extends money beyond the regulated deposit relationship for cross-border and DeFi-native use cases, while the other digitises the deposit itself, keeping funds on the bank’s balance sheet for treasury and trade finance.

Which one matters more depends on a bank’s client base and strategic priorities, not on which technology feels more familiar or follows the hype. For most institutions, the more defensible near-term move is building on relationships and infrastructure that already carry trust, rather than starting from scratch.

Banks that move deliberately on whichever instrument fits their clients will set the pace for competitors who hesitate.