2026 Tokenized Bank Deposit Outlook

This special Outlook Edition of Tokenization Insight is authored by Basak Toprak, Head of JPM Coin Product and EMEA Kinexys Digital Payments, Kinexys by J.P. Morgan

Tokenization is no longer theoretical. Across traditional and decentralized finance, it is restructuring liquidity, settlement, and digital asset workflows at increasing speed.

This is a space we know well. We’ve been developing blockchain-based infrastructure since 2015. Our first product – Kinexys Liink, the first bank-led, scalable, permissioned payments information network – launched in 2018, followed quickly by Blockchain Deposit Accounts on Kinexys Digital Payments, our private, permissioned blockchain network in 2019. Since inception, over $3 trillion in transaction volume has been processed on the Kinexys platform, and on a daily basis we process on average more than $5 billion in transaction volume.

In November this year, we took the next natural step, launching JPM Coin, J.P. Morgan’s deposit token (ticker: JPMD), on Base, the Layer 2 Ethereum blockchain built within Coinbase. This is the first time bank deposits have been brought onto public blockchain, marking a significant, tangible step forward in the evolution of digital money. We have always believed in having a bank-issued deposit token on public blockchains and first started ideating on how to bring this to life in 2022 as part of Project Guardian.

However, in conversations around the future of tokenization and blockchain adoption in institutional finance, we’re often asked, “why launch a deposit token and not a stablecoin?” and, “which will come out on top in the end?”

Until now, the only payment option on public blockchain has been stablecoins. We’re seeing  rapidly growing interest from both digitally native and traditional firms to engage further in the digital assets space on public blockchains. But they also want to use tools they already know and trust. This demand from our institutional clients is what’s behind the launch of JPM Coin (ticker: JPMD).

A deposit token, such as JPM Coin, serves as a digital representation of a bank deposit on public blockchain. It operates within a long-established framework often referred to as ‘fractional banking’. Banks hold deposits and use them to lend to households, businesses and the wider market within a regulated system. Deposits have multiple roles; as a medium of exchange (payment instrument) and as a store of value (deposit instrument), which is the counterpart to enabling loans and lending. This is a core of how banks function. When we hold deposits with a bank, we rarely think about the depth of prudential framework that sits behind them; we typically take them for granted.  

For users of bank deposits and deposit tokens, the confidence is derived from the entire regulated banking infrastructure, with its multiple layers of defence. From a holder perspective, this means the deposit is supported by a broad, system-wide set of safeguards; not a single mechanism alone. These layers of protection are perhaps invisible, but important  for the holders.

In comparison, stablecoins are built as payment instruments backed by one-to-one cash or high-quality liquid asset reserves - which is a different, though not superior, model. The reality here is that with a stablecoin, your confidence as a holder rests entirely on the issuer’s reserve management, quality of assets, operational controls and the emerging regulatory requirements applied primarily on the issuer and reserves.

For many multinational institutional companies, this level of risk doesn’t match their risk appetite. They want a payment instrument they can use on public blockchains but treat in the same way as other deposits on their balance sheet (subject to their auditor’s assessment). They want interest payouts. They want an instrument that integrates seamlessly with their traditional banking systems, so they don’t have liquidity siloes. A deposit token provides that.

Today, stablecoins are primarily used for retail use cases, including crypto trading, remittances, and as a means to access USD as a store of value in jurisdictions where there’s low trust in the financial systems. There have always been instruments such as e-money, and, more recently, stablecoins, that are intended to perform only the payment instrument role rather than both payment and deposit roles. We have also always had multiple layers of money in circulation, including central bank-held money and institutional, commercial money. This won’t change – there will be different, but complementary, use cases for deposit tokens, stablecoins and all the other forms of payments we have today.

We also believe that both private and public blockchain options will coexist moving forward. There will continue to be institutional firms that want to keep their money movements on a private permissioned network, while still benefitting from the 24/7, 365, programmable benefits that blockchain infrastructure provides.

Growth in volumes and adoption of deposit tokens is of course subject to growth in more assets coming on chain and the use cases for making payments and settlements. While there’s always a risk that hype outweighs true adoption, we think this is minimal when it comes to tokenization. We recently launched a new offering – Kinexys Fund Flow – which aims to transform alternative investing fund servicing, enabling streamlined distribution and better client-friendly features.

We believe we will see further development and adoption of these types of solutions and services. And we see potential for JPM Coin to support such growth by providing a strong option for holding cash on chain and making payments - where the volumes could potentially scale to $10bn in the next three to five years. The changing regulatory landscape and movement across the industry point in one direction. Tokenization is here to stay.

Please note this is the last Weekly Research issue of 2025. Thank you for all your support this year. See you in 2026!

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.