Stablecoins, Tokenized Deposits, and Public Money: A New Payment Architecture Is Taking Shape

The stablecoin debate is no longer only about whether digital dollars can compete with bank deposits. It is now about who may issue them, what assets back them, how they settle, and how public digital money will coexist with private payment tokens. The latest developments show a market that is simultaneously maturing and fragmenting: U.S. regulators are moving from statute to implementing rules, major banks are building tokenized-deposit and stablecoin infrastructure, central banks are testing CBDCs with different privacy and control models, and payment volumes are reaching a scale that makes the monetary implications hard to ignore.

U.S. Rules Are Defining the Stablecoin Playing Field

The U.S. Treasury has issued a proposed rule to implement Section 3 of the GENIUS Act, focusing on who may issue, offer, sell, or make available payment stablecoins in the United States. The proposal would define key terms, generally limit domestic issuance to permitted payment stablecoin issuers or qualifying foreign issuers, and provide safe harbors for foreign issuers that do not target U.S. persons. Comments are due by October 19, 2026. The GENIUS Act becomes effective on the earlier of January 18, 2027, or 120 days after final federal payment stablecoin regulations are issued.

The fight over stablecoin yields is becoming equally important. U.S. community banks are opposing provisions in the CLARITY Act that could allow yield-like rewards on stablecoins, warning that up to $1.3 trillion in deposits could move into stablecoins and reduce local lending by roughly $850 billion. The community bankers’ group ICBA says the rewards loophole must be closed completely. Because Senate passage requires 60 votes, the dispute is likely to shape whether stablecoin yields become a regulated feature of the U.S. payment ecosystem or a source of political resistance.

Banks Are Building Parallel Railways

Major banks are no longer treating private stablecoins as a purely hostile category. JPMorgan Chase has held early internal discussions about issuing a public stablecoin, though it says it has no current plans and would revisit the option only if customer demand or the regulatory environment changes. That is distinct from JPM Coin, its existing tokenized-deposit product. JPMorgan’s Kinexys platform already processes more than $7 billion in daily tokenized-deposit volume.

A broader group of lenders, including Wells Fargo and Bank of America, is developing a jointly sponsored, dollar-backed digital token aimed at global commercial clients, with possible later versions denominated in other Group of Seven currencies. In parallel, the Clearing House is working with JPMorgan, Bank of America, Citigroup, and other banks on a shared network for tokenized commercial-bank deposits, with a target launch in 2027. The BankChain Alliance, formed by 39 state banking associations, is also building shared permissioned-blockchain infrastructure with a 2027 target. Early Warning Services, the Zelle operator owned by major U.S. banks, has launched the ZLUSD stablecoin for cross-border remittances, adding further pressure on established issuers such as Tether and Circle.

The strategic implication is that banks are not choosing between stablecoins and tokenized deposits. They are building both, while positioning themselves to control settlement, compliance, and customer relationships.

Payment Volumes and Brand Visibility Are Growing

Stablecoin liquidity has reached a scale that supports mainstream payment experimentation. USDT’s market cap is around $183.4 billion, and USDC is near $74.1 billion, putting the two major dollar-linked tokens at more than $257 billion combined. Global stablecoin supply is approximately $308 billion, with Tether’s USDT accounting for roughly 60% of that pool.

The market has also shifted from distribution to accumulation. After a period of net outflows that began on May 8 and coincided with weaker Bitcoin price action, exchange inflows have increased for the first time in three months. If that shift persists, it could signal a broader return of risk appetite to digital-asset markets.

Card usage is another sign of maturation. Cumulative stablecoin card spending has surpassed $10.9 billion globally, and July 2026 recorded more than $1 billion for the first time. Dollar-backed stablecoins dominate these transactions, and networks such as Visa are expanding stablecoin-linked access across more than 175 million merchant locations. Industry forecasts point to annualized stablecoin card spending rising from roughly $12.5 billion today to about $50 billion by 2028, though the projection is company-reported rather than independently confirmed.

Brand visibility is also rising. Circle has become Chelsea FC’s front-of-shirt partner for the 2026/27 season, giving USDC prominent exposure beyond crypto communities. Retail interest in newer tokens and presales adds a speculative layer, but the core development is the expansion of stablecoin liquidity into cards, remittances, and everyday commercial payments.

Argentina’s Case: Stablecoins as Persistent Dollar Access

In Argentina, roughly one in five people use crypto, and downloads of major crypto apps nearly doubled in 2024 as residents sought dollar exposure. Dollar-pegged stablecoins became widely used because currency controls and high inflation made official dollars difficult to access; 94% of peso crypto trading flowed to stablecoins, and USDC payments to contractors rose during inflation spikes.

After Argentina eased dollar-purchase limits in April 2025, the crypto-dollar premium narrowed and inflation slowed. Yet wallet downloads and stablecoin usage remained elevated, suggesting that stablecoin use is becoming a durable payment habit rather than a temporary crisis hedge.

Public Money Is Being Tested in Different Forms

CBDCs are moving from theory to policy, but with very different design choices.

Delhi’s Lakshmi Yojana uses a hybrid structure for eligible women: a monthly benefit of Rs 2,500, with Rs 1,500 placed in recurring deposits locked until July 31, 2029, and Rs 1,000 transferred into a bank-linked CBDC wallet. The CBDC portion can be spent only on permitted items, with alcohol, tobacco, narcotics, lotteries, gambling, and betting restricted. Beneficiaries can instead choose to deposit the full Rs 2,500 in a recurring account. The Council of Ministers can review the maturity period two years after launch, though July 31, 2029 remains the current lock-in date.

India is expected to propose at the BRICS summit that member countries link their central bank digital currencies to enable direct cross-border payments. The goal is faster and cheaper international transactions, greater use of local currencies, and reduced reliance on the U.S. dollar. India’s digital rupee is in a pilot and expansion phase, giving the country a platform for that interoperability push.

Europe is developing two parallel digital-euro pathways: a privacy-focused CBDC and private euro stablecoins. The ECB says the digital euro will keep offline payments private to the payer and payee and prevent direct online identification, while banks retain anti-money-laundering data access. At the same time, Revolut has begun rolling out Bridge Building’s EURR stablecoin on Ethereum in select European countries, aiming to maintain a 1:1 euro value. The competing models will be judged by privacy, usability, regulatory clarity, and economic utility.

Russia offers a contrasting signal. Sber’s CFO said there is little evidence of broad retail, corporate, or financial-institution demand for Russia’s digital ruble, with interest mainly from the central bank. That suggests that CBDC adoption will not follow a single template; public digital money may succeed when it solves a specific problem rather than when it is simply available.

Crypto Collateral Enters Mainstream Banking

Sberbank, Russia’s largest bank, said it plans to accept Bitcoin, Ethereum, and Tether’s USDT as loan collateral once the Bank of Russia permits their public circulation under the country’s new digital currency law. The bank stressed that the assets would be used only as loan security, not as money, and it disclosed no loan-to-value ratio, interest rate, or launch date. Domestic crypto payments remain banned under Russia’s new law.

The move is notable because it frames crypto assets as a banking asset class: collateral, not currency. If other jurisdictions follow, banks may develop standardized valuation, custody, and haircut models for digital assets, turning crypto holdings into a more conventional input to credit risk management.

The Stablecoin Versus Tokenized Deposit Debate

Tether CEO Paolo Ardoino has challenged the Bank for International Settlements’ view that tokenized bank deposits are the better foundation for future money. He argued that stablecoins are backed 100% by liquid assets such as U.S. Treasuries, while tokenized bank deposits remain inside the fractional-reserve banking system and are often uninsured, with only about 10% held in liquid reserves. In his view, the BIS is rightfully worried that stablecoins expose the weakness of fractional-reserve banking, and he questioned why savers would choose tokenized deposits over fully reserved stablecoins.

BIS General Manager Pablo Hernández de Cos responded that stablecoins still fail the credibility test at scale. At the Federal Reserve’s Jackson Hole symposium, he said stablecoins can trade away from par, lack elasticity, are fragmented across blockchains, and complicate anti-money-laundering controls. He argued that tokenized bank deposits are a more promising basis for future money because they remain within the regulated banking system and settle through central bank reserves. He also warned that large stablecoin adoption could raise bank funding costs, create run risk for issuers, and raise concerns about monetary sovereignty and digital dollarization.

The debate matters because the two models impose different risk structures. Stablecoins transfer some monetary function to private issuers, while tokenized deposits keep liabilities inside banks but depend on bank solvency and monetary policy. The eventual regulatory settlement will likely determine which form becomes the default rail for institutional payments.

Conclusion

The next phase of stablecoins will be defined less by market size and more by legal and monetary architecture. The U.S. Treasury’s proposed rule, the fight over stablecoin yields, bank tokenization projects, and CBDC pilots are all pulling the market in different directions. If private stablecoins gain trusted redemption, interoperability, and compliance, they may become a major payment rail. If not, tokenized deposits and public digital money may fill the gap. The signal to watch is not only which token grows fastest, but whether regulators can make the system legible enough for households, banks, and businesses to rely on it.