How are banks beating stablecoins?
HSBC just expanded its tokenised deposit service (TDS) to cross-border corridors (Hong Kong ⇄ Singapore) and is eyeing scale into the UK/EU. [ANNOUNCEMENT]
Why it matters: Stablecoins may have led the early race with speed and reach, but banks are striking back with their strongest asset: regulated deposits. By tokenising them, traditional financial institutions are creating digital money that delivers blockchain’s instant, programmable features with the safety, trust, and regulatory clarity only banks can offer.
Let’s dive in.
What’s happening
HSBC has completed its first live USD transfer between Hong Kong and Singapore for Ant International and is pitching 24/7 instant settlement as a new baseline for corporate treasury operations.
Stepping back: In June 2025, JP Morgan introduced its deposit token JPMD—JP Morgan Deposit Token. [Analysis]
Marc Baumann
Zooming in: HSBC’s move is practical as tokenised deposits let a bank represent fiat as on-chain tokens that integrate with a client’s treasury system, remove cut-offs, and cut reconciliation work by creating single, auditable records of movement. That’s exactly the efficiency treasurers buy: real-time visibility and on-demand liquidity inside existing banking relationships.
For Ant International, this means their treasury department can manage liquidity across Hong Kong and Singapore in real-time, as if it were a single pool of cash, eliminating the friction of time zones and banking cut-off times.
Zooming out: For years, stablecoins dominated the digital money conversation, offering fast, low-cost, global transactions on public blockchains. By mid-2025, the market had grown to over $260B in circulation, with annual transaction volumes surpassing Visa and Mastercard combined. But despite their reach, stablecoins carry material risks for institutional adoption: they are uninsured, expose holders to issuer-specific counterparty risk, and often limit redemption to a select set of arbitrageurs.
Tokenised deposits, by contrast, are a bank-led alternative that combines blockchain efficiency with institutional-grade safety. Representing regulated bank liabilities, they are eligible for federal deposit insurance, comply with AML and sanctions rules, and offer 24/7 programmable settlement. The GENIUS Act (July 2025) crystallised this advantage: while it established a federal framework for stablecoins, it explicitly exempted tokenised deposits, enabling banks to innovate without being constrained by new stablecoin rules. Crucially, the Act prevents stablecoins from paying interest, whereas tokenised deposits can, creating a clear economic incentive for institutional clients to shift their on-chain cash into bank-backed, interest-bearing instruments.
Major banks: HSBC, JPMorgan, Citi, are executing this strategy not as isolated pilots but positioning tokenised deposits as the institutional digital cash standard, marrying innovation with systemic reliability in a way stablecoins cannot match.
Competitive Landscape
- HSBC TDS → Corporate treasuries, global corridors, fiat-backed tokens.
- JPMorgan (JPMD / Partior) → Native cash settlement on public blockchains.
- Citi Token Services → Cross-border trade finance & trade finance digitisation.
- Standard Chartered (Libeara) → Tokenising government bonds, money market funds, and other real-world assets.
- BNY Mellon Experiments → Custody + tokenised settlement rails.
Our take
Tokenised deposits give corporate treasuries familiar legal and accounting treatment (and bank protections that can include deposit insurance), plus integrated KYC/AML and custody, but they’re often permissioned and only valuable where the counterparty accepts that bank’s token. Public stablecoins win on universal acceptance and composability across crypto-native rails, but carry regulatory and counterparty-quality questions that many treasury teams find uncomfortable. Expect both to coexist, used for different problems: tokenised deposits for closed-loop, high-value corporate rails; stablecoins for open-ecosystem liquidity and DeFi composability.
- Stablecoins will likely continue to thrive in the crypto-native economy, for retail-focused remittances, and in jurisdictions where access to regulated banking is difficult. Their strength lies in their accessibility to the public, permissionless blockchains.
- Tokenised deposits will become the dominant medium of exchange for high-value corporate treasury, institutional finance, and as the settlement layer for the coming wave of tokenised real-world assets (securities, real estate, etc.).
Your takeaways
For leaders, this is an operational opportunity more than a technology one; real gains come from re-wiring treasury flows (settlement, FX conversion, intra-group netting) around always-on rails, while keeping legal and compliance controls front and centre.
For corporates, a token that is a direct liability of a major bank and is eligible for deposit insurance is a fundamentally different and less risky instrument than a stablecoin issued by a non-bank entity.
- Money is now programmable. It’s about embedding business logic directly into your money. Imagine automatically releasing payment to a supplier the instant a smart contract verifies goods have been delivered, or creating intelligent, rule-based systems for managing cash flow across dozens of global subsidiaries in real-time. This is now possible.
- Get ready for everything to be tokenised. Tokenised deposits are just the beginning. The rails being built by these banks are designed for a future where securities, supply chains, and physical assets are also represented on a blockchain. By integrating tokenised cash into your operations now, you are building the on-ramp for the next generation of finance and future-proofing your business.
The bottom line: Banks are set to outflank stablecoins in the institutional market. It’s a calculated push into corporate treasury, wholesale payments, and capital markets. Recent tech maturity, paired with the GENIUS Act’s regulatory clarity, has created an edge for tokenised deposits, offering insured, interest-bearing, programmable digital cash that institutional clients can trust. The race now hinges on which asset best combines innovation with systemic reliability.
Other signals of today
- Bank of Canada urges federal stablecoin rules to modernise payments, remittances. Link
- UAE signs global crypto tax deal, launches consultation to shape rules. Link
- Galaxy tokenises Nasdaq-listed GLXY shares on the Solana blockchain. Link
- China and South Korea launch CNH and KRW stablecoins globally. Link
- PayPal invests in Stable blockchain to expand PYUSD usage globally. Link
That’s all for today’s CEO Note.
Best,
Marc & Team
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