[Report] Tokenized Money for Banks

Tokenized Money for Banks

This report covers the three product families a bank can offer. Tokenized deposits keep the customer claim as a deposit on the bank's books. First party stablecoins convert the claim into a redemption contract against a segregated reserve pool, and third party stablecoins route settlement through an external issuer, moving the claim off the bank's balance sheet.

Aug 12, 2026

The GENIUS Act, MiCA, and Basel SCO60 give banks a clear regulatory basis for issuing tokenized money on public networks, while venues such as Hyperliquid already show institutional flow that clears around the clock and is margined in stablecoins. Both the regulatory conditions and the client demand are now in place.
Among the three product families, tokenized deposits keep the claim as a deposit, preserving the deposit franchise, guarantee coverage, and existing capital treatment. The token moves only between counterparties the bank approves, and JPMD on Base is the live example.
In contrast, a bank issuing its own stablecoin gains a settlement rail it controls around the clock but shifts its funding into the most punitive regulatory categories. A third party stablecoin reaches far wider markets, at the cost of prefunded coins that earn no liquidity recognition or client deposits that leave the books entirely.
Ultimately, no single product family serves every institutional client need. The same hedge fund may post margin on a tokenized deposit network, hedge weekends with a third party stablecoin, and rebalance through a consortium issued asset, so banks will need all three in their strategy.

The author of this report may have personal holdings or financial interests in assets or tokens discussed herein. However, the author affirms that no transactions have conducted using material non-public information obtained in the course of research or drafting. This report is intended solely for general information purposes and does not constitute legal, business, investment, or tax advice. It should not be used as a basis for making any investment decisions or as guidance for accounting, legal, or tax matters. Any references to specific assets or securities are made for informational purposes only and should not be construed as an offer, solicitation, or recommendation to invest. The opinions expressed herein are those of the author and may not reflect the views of any affiliated institutions, organizations, or individuals. The opinions and analyses expressed herein are subject to change without prior notice. In addition, beyond the individual disclosures included in each report, Four Pillars, may hold existing or prospective investments in some of the assets or protocols discussed herein. Furthermore, FP Validated, a division of Four Pillars, may already be operating as a node in certain networks or protocols discussed herein or may do so in the future. Please see below links in the footer for FP Validated's participating network disclosures and for broader disclosure details.

Tokenized Money for Banks

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