While the crypto world debates whether tokenized deposits will kill stablecoins, and some investors in traditional finance claim that (transferrable, onchain) money market funds would make both obsolete, the fact is that the future of onchain institutional finance requires tokenized commercial bank deposits, stablecoins, and tokenized money market funds. Each solves different problems for different users at different times, and should be seen as highly complementary parts of a future onchain payment and value transfer infrastructure.
JP Morgan’s recent launch of its JPMD “deposit token” on Base has reignited the “stablecoin killer” narrative. Similar proclamations emerged when BlackRock’s BUIDL fund surged in adoption. The reality, however, is that adoption of one doesn’t preclude the adoption of another: tokenized commercial bank deposits, stablecoins, and tokenized money market funds are all integral tools in the institutional toolkit.
Stablecoins transformed crypto markets by enabling efficient trading pairs and seamless, 24/7 cross-border payments. Now we’re seeing tokenized money market funds that enhance stablecoins by offering the same stability but with meaningful yields—currently 4-5% in today’s rate environment. The funds are a simple product to understand: stable value, daily liquidity, and actual returns.
Yet let’s maintain perspective. The global money market industry is measured in trillions of dollars, not billions. Today, tokenized money market funds total just $2 billion — a rounding error at the global level. But that’s precisely why the opportunity is so compelling.
USD Dominance: A Feature Across All Three
The prevalence of USD-denominated products—whether stablecoins, tokenized deposits, or money market funds—reflects global market realities. Consider the two primary use cases of these products, which are cross-border payments and crypto trading. For payments between, say, the US and the Philippines, or UK and Costa Rica, market participants naturally think in dollars. It’s the global reserve currency, like it or not.
This dollar dominance isn’t unique to any one instrument. JP Morgan’s JPMD is USD-based. The largest stablecoins are dollar-denominated. The most successful tokenized money market funds? Also dollars. This consistency across instruments actually enhances interoperability, as institutions can move between deposits, stablecoins, and money market funds without exchange rate risk.
Different Tools for Different Jobs
The real insight comes from understanding the value of each digital asset type. Tokenized commercial bank deposits excel for regulated, permissioned transfers between known counterparties. They offer bank backing and seamless integration with existing banking relationships, which is ideal for institutional settlement.
Stablecoins dominate where openness matters. Their permissionless nature enables 24/7 global trading, DeFi participation, and emerging market payments. Billions of dollars in stablecoin transactions are processed precisely because as long as someone has access to the internet, stablecoin transactions work everywhere, anytimeand for anyone.
Tokenized money market funds have the potential to bridge both worlds. They offer yield while preserving the liquidity and transferability of blockchain assets. More importantly, they can be posted as collateral. In times of market stress, institutions can use tokenized MMFs instead of liquidating positions — reducing both costs and systemic risk.
The Infrastructure Challenge Becomes the Opportunity
The current phase of adoption presents interesting operational considerations, as many institutions need to run dual systems during this transition period. The blockchain serves as the fund share register, but traditional transfer agents still maintain the exact same register in their systems. For tokenized deposits, the same duality applies in the sense that banks still operate „mirrored“ accounts in their core banking systems to keep track of the onchain balances for accounting, regulatory reporting and treasury management purposes. This temporary duplication ensures interoperability with established processes and regulatory compliance while the industry evolves.
But this challenge will eventually become an opportunity. With all three instruments potentially operating on the same blockchain infrastructure, the friction between them drops dramatically. Smart contracts will be able to automatically sweep excess deposits to money market funds for yield, or convert stablecoins to bank deposits when regulatory compliance demands it.
Breaking Through: The Convergence Path
The repeal of the SEC’s SAB 121 in the US means custodians can now offer digital custody services across all three instrument types. Switzerland’s DLT Act already allows tokens to represent legal ownership with full rights and obligations. The regulatory pieces are falling into place for a unified ecosystem.
Circle’s cross-border payments initiative supported by Deutsche Bank and others shows how these instruments can work together. Banks provide the on/off ramps and regulatory compliance, stablecoins provide the 24/7 global rails, and money market funds provide the yield for funds at rest.
The real breakthrough will come when institutions stop viewing these as competing options and start leveraging them strategically. Need instant settlement with a known counterparty? Use tokenized deposits. Trading crypto or sending urgent payments? Stablecoins are the way to go. Parking institutional cash while maintaining liquidity? Use tokenized money market funds.
The Multi-Pillar Future
In the future, this three-pillar ecosystem will operate seamlessly – with tokenized commercial bank deposits ideally being complemented by tokenized central bank money for seamless onchain interbank settlement Just as institutions shift between money market funds and trading accounts based on immediate needs today, tomorrow’s digital treasurers will optimize between tokenized deposits, stablecoins, and tokenized MMFs — all on the same rails, all near-instantly. However, the real breakthrough will come when every institution can access and coordinate all three completely independently.
Together, they combine mature financial instruments with 21st-century technology, offering exactly what institutions need: familiar products with enhanced capabilities delivered by trusted providers within regulatory frameworks.
About the Author:
Thomas Eichenberger is Chief Strategy Officer and Deputy Group CEO at Sygnum. Previously, Thomas was Chief Product Officer responsible for Sygnum’s custody, staking, trading, lending, tokenization, and RegTech offering. Prior to joining Sygnum, Thomas was a strategy consultant at Boston Consulting Group where he led projects for financial institutions, insurance companies, and private equity funds. Thomas started his career at global consultancy Roland Berger and has also worked at UBS and Credit Suisse.