The tokenised money landscape
A decade after the first stablecoin launched as a niche instrument for crypto trading, tokenised money has become a central question for institutional finance, central banks and regulators worldwide. The market spans four instrument categories at different stages of maturity: CBDCs, largely confined to jurisdictional pilots; tokenised deposits, with Kinexys by JP Morgan as a leading example of live institutional deployment; fiat-pegged stablecoins such as Circle’s USDC, dominant by transaction volume; and tokenised money market funds, emerging as the yield-bearing option for institutional cash holdings. The regulatory response is accelerating but uneven. Around 70% of jurisdictions are developing or have introduced stablecoin rules, yet frameworks remain inconsistent and meaningful cross-border supervisory cooperation is largely absent. That gap is what this study sets out to map.
Research approach and methodology
The findings draw on 21 semi-structured interviews conducted between July and September 2025, spanning two groups: market participants and public authorities. Contributing organisations include HSBC, JP Morgan, the Bank for International Settlements and the Monetary Authority of Singapore, among others. Interviews were conducted on a non-attribution basis, combining open-ended qualitative questions with scored responses on 1-5 and 1-10 scales to enable comparison across the sample. This primary research was complemented by extensive desk-based analysis.
Classifying tokenised money: a new taxonomy
Despite rapid market growth, no widely accepted classification framework for tokenised money has emerged. Public authorities, financial institutions and crypto-native participants all classify these instruments differently, producing a proliferation of terminology that hinders comparison, complicates risk assessment and makes regulatory design harder than it needs to be. To address this, the report proposes a two-layer taxonomy. The first layer classifies instruments across four core dimensions: the nature of the claim, the backing, the form on the ledger and access conditions. These dimensions are foundational in that a change in any one of them alters what the instrument fundamentally is, potentially shifting it into a different category. Mapping instruments against these dimensions produces five categories spanning the state-issued to privately-issued spectrum.
The second layer maps the features that determine how an instrument operates in practice, grouped into three areas: technical architecture (ledger type, finality and privacy model); legal and governance properties (disclosure requirements, backing asset segregation and transfer controls); and business and economics model features (yield distribution, fee structure and convertibility and stabilisation mechanisms). Unlike Layer 1, these features can evolve over time. A stablecoin might migrate from a public to a permissioned ledger or adopt stricter transfer controls, without changing its fundamental category. Together, the two layers provide a structured basis for comparing instruments and informing regulatory categorisation.
Use cases and adoption trends
Drawing on interviews across banks, infrastructure providers and fintech companies in multiple jurisdictions, the research identified four primary use cases driving institutional adoption, with a clear hierarchy of near-term priority:
· cross-border payments and real-time settlement ranked first, with unanimous recognition as the most compelling immediate application. The most frequently cited driver was 24/7 settlement capability, specifically the ability to move money at the moment it is needed, unconstrained by the operating hours of domestic payment infrastructure.
· treasury and liquidity management came second. A key finding is that institutional clients are broadly unwilling to hold non-yielding tokenised money for treasury purposes, creating a natural division of roles: stablecoins for transfers when money is moving and yield-bearing tokenised MMFs when money is at rest. In most jurisdictions, yield-bearing stablecoins are prohibited by regulation, which reinforces this pairing.
· trade finance digitisation is a longer-horizon application expected to be pulled forward by corporate client demand rather than driven by banks, with companies seeking more efficient processes creating the pressure for institutions to come on-chain.
· capital markets represents the most far-reaching long-term vision: tokenised money as the native settlement asset for tokenised securities, enabling atomic settlement that eliminates counterparty risk and compresses settlement times from days to seconds.
Four cross-cutting barriers were consistently raised across interviews: regulatory uncertainty over which obligations apply to which instruments; privacy concerns arising from public ledger transparency; AML/CTF compliance challenges across multiple institutions and jurisdictions; and interoperability and integration challenges, specifically the operational burden of running tokenised and legacy systems in parallel during what is likely to be a lengthy transition period.
Interoperability and programmability
Interoperability was the highest-rated factor across the entire study by interviewees, yet the current state is far from complete. On a like-for-like comparison, stablecoin transactions do not actually reduce the number of intermediaries involved. In the words of one bank executive, there is no change in market structure. Building fragmented networks risks recreating the siloed dynamics of the existing system on different technical rails. Four technical approaches are currently emerging: multi-chain deployment (Circle’s USDC across 30+ networks), bridge technologies, API standardisation (Visa and Mastercard) and correspondent banking models, each with distinct trade-offs between compatibility, security and genuine transformation. The full paper includes a detailed comparison of four major interoperability initiatives (Partior, Project Guardian, RSN and Project Agorá), illustrating how these approaches play out in regulated environments. Programmability, defined as the ability to embed executable logic such as conditions, rules and constraints directly into instruments and the mechanisms governing them, is best understood as an accelerator rather than a prerequisite for adoption. It represents a fundamental shift in financial infrastructure logic: from ex-post record-keeping to ex-ante execution, where outcomes are determined and verifiable at the point an instruction is sent. In practice, this is already being applied across a spectrum of use cases, from basic conditional transfers and automated cash sweeping through to trade finance automation, parametric insurance and AI-driven treasury optimisation. Key risks include smart contract vulnerabilities, dependency on external data oracles whose integrity cannot always be assured, and unresolved questions around the legal enforceability of self-executing contracts across jurisdictions.
The policy and regulatory landscape
Regulatory frameworks are simultaneously shaping and constraining how tokenised money develops. Central banks and regulators assess instruments against four core criteria: whether they support the singleness of money and payment finality; whether they protect against illicit finance; whether they promote efficiency and financial inclusion; and whether they enable the safe and efficient operation of payment systems. Different instruments perform differently against these criteria, which is a key driver of divergence in how they are classified and regulated. When regulators interviewed for this study were asked to identify the risks they are monitoring most closely, three priorities stood out clearly.
Regulators’ own assessment of their frameworks was candid. Responses indicated that existing stablecoin rules are only partially effective in addressing risks, particularly those arising from cross-border payments, and that global policy is broadly perceived as fragmented despite shared principles at the international level. On use cases, regulators’ views aligned closely with industry, identifying cross-border payments, digital asset trading and wholesale settlement as the primary current applications, with strong expectations for continued expansion over the next two to five years. The five jurisdiction case studies (the EU, Hong Kong, Japan, Singapore and the United States) reveal accelerating regulatory activity built on broadly shared principles, but with meaningful divergence in the detail. All five address governance, reserve quality and redemption rights, but diverge on reserve asset location, treatment of foreign issued stablecoins and whether interest can be passed to holders. These differences reflect distinct policy priorities: the EU’s emphasis on monetary sovereignty; the US commitment, through the GENIUS Act, to reinforcing the dollar’s international role; and the competitiveness objectives of Singapore and Hong Kong. Cross-border supervision remains the most significant unresolved gap, with no functioning coordination mechanisms in place despite the global footprint of major stablecoin issuers.
Tokenised money is not a single technology but a spectrum of design choices, each carrying different implications for risk, regulation and utility. The research reveals a market sorting itself into functional roles: instruments optimised for movement and instruments optimised for storage. How durable that division proves will depend on how technology and competition evolve. What unites them is a shared infrastructure problem. Networks remain fragmented, regulatory frameworks differ in ways that matter at the margin, whilst the institutions tasked with oversight are still operating within jurisdictional boundaries the instruments themselves do not respect.
If you are interested in exploring this topic further, the full interviews and findings from our research team covering market trends, use cases and policy perspectives please read the Full Report.
This article first appeared in Digital Bytes (10th of March, 2026), a weekly newsletter by Jonny Fry of Team Blockchain.