Tokenized Deposits vs Stablecoins: A Security Comparison
Quick answer. For a bank, its own tokenized deposit carries less outside risk: it stays a deposit, and the bank holds mint, freeze and upgrade keys. A stablecoin adds an issuer's reserves and keys. Both need chain and key controls.
Video transcript
For a bank, its own tokenized deposit carries less outside risk. A stablecoin adds an issuer's reserves and an issuer's keys.
The GENIUS Act excludes deposits, even tokenized ones, from the stablecoin definition. A tokenized deposit stays a bank liability. A stablecoin is a claim on an issuer's reserves, without deposit insurance.
On a stablecoin, the issuer holds the admin keys. Circle's design has minters, a pauser, a blacklister and an upgrade admin. A bank holding it controls none of them.
On its own tokenized deposit, the bank holds those powers itself. The risk moves to its own key management and change control.
The network differs too. Citi runs a private ledger it owns. JPMorgan's JPMD sits on Base, a public chain, where others control ordering, finality and upgrades.
Basel tests the network too. It has called permissionless blockchains a source of risks that cannot be sufficiently mitigated at present.
A stolen mint key or bad upgrade is the bank's own cleanup, or the issuer's incident. Either way, every balance must reconcile with the core ledger.
Whatever you choose, map every admin role before launch. Ask who holds each key, whether upgrades need a delay, whether minting is capped, and who can lift a freeze.
Guardian maps who can upgrade, pause, mint or move funds. Read the full comparison, or talk to Guardian at guardian.security.
Banks now have two ways to put dollars onchain: tokenize their own deposits, or issue or hold a stablecoin.
Tokenized deposits are already in use. HSBC extended its Tokenized Deposit Service to the US in April 2026, with 24/7 transfers for eligible corporate and institutional clients.
This comparison skips the economics. It covers the legal claim, the admin keys, the network and the attack surface.
Where this article discusses regulation, it covers the technical and security side only. It is not legal advice; confirm how the rules apply to you with counsel.
The Legal Claim
US law now draws the line. The GENIUS Act's definition of a payment stablecoin excludes a deposit, "including a deposit recorded using distributed ledger technology" (section 2(22)).
| Tokenized deposit | US payment stablecoin | |
|---|---|---|
| Holder's claim | A deposit liability of the bank | A claim on an issuer backed by reserves |
| Issuer | The bank itself | A permitted issuer; for a bank, an approved subsidiary |
| Backing | The bank's balance sheet | Identifiable reserves, at least 1 to 1 |
| Deposit insurance | Same as other deposits, under an FDIC proposal | None (section 4(e)) |
| Interest | JPMorgan says JPMD can pay it | Issuers may not pay interest or yield |
| Issuer insolvency | Same as other deposits under the FDI Act, per the FDIC | Priority claim on required reserves (section 11) |
The FDIC's April 2026 proposal calls the two "economically and legally distinct." It describes a tokenized deposit as a bank's deposit liability "in tokenized form and recorded on a distributed ledger technology."
What the proposal would settle:
- The technology used to record a deposit does not affect whether it is a deposit.
- Some tokenized bank liabilities may not be deposits; each must meet the statutory definition.
- Stablecoin reserves held at a bank are insured to the issuer, "not insured to payment stablecoin holders on a pass-through basis."
It is still a proposal. Comments closed June 9, 2026.
Basel treatment
Basel's cryptoasset standard splits them too. Bank-issued tokenized payment assets backed by the bank's general assets may sit in Group 1a, if they meet every condition (SCO60.9, footnote 2).
A stablecoin reaches Group 1b only if it passes a redemption risk test and its issuer faces prudential capital and liquidity requirements (SCO60.11).
Our Basel standard explainer covers both groups.
Who Controls Mint, Freeze and Upgrade
Next, the keys. On a stablecoin, the admin powers sit with the issuer, not the holder. Circle's FiatToken design, for example, defines these roles:
- A master minter adds minters and sets their allowances.
- Minters create and destroy tokens.
- A pauser can stop all transfers, minting and burning.
- A blacklister can block transfers to or from any address.
- An admin can switch the implementation contract behind the proxy.
The design doc says Circle "will control the address of all roles." A bank that holds such a stablecoin controls none of them.
US law requires the capability. A permitted issuer may issue only if it has "the technological capability to comply" with lawful orders to seize, freeze, burn or prevent transfer (GENIUS Act sections 2(16) and 4(a)(6)(B)).
For how those powers are used in practice, see our USDC and USDT freeze explainer.
On a tokenized deposit, the issuing bank holds the same kinds of powers itself. The risk moves from issuer diligence to the bank's own key management and change control.
Ask the same questions either way:
- Who holds each role: one key, or a quorum?
- Does an upgrade need a second approval and a delay?
- Is minting capped and reconciled to the core ledger?
- Can a freeze target one account, and who can lift it?
- Who is alerted when a role changes hands?
Chain and Access Model
The second difference is the network. Banks' own announcements show different models.
| Model | Example | Who runs what |
|---|---|---|
| Private permissioned ledger | Citi Token Services (2023 pilot) | Citi owns and manages the blockchain |
| Permissioned token, public chain | JPMorgan's JPMD on Base (2025 proof of concept) | JPMorgan issues the token; Base is a public chain built within Coinbase |
| Stablecoin, public chains | Circle's FiatToken design | Validators run each chain; the issuer holds the roles |
Citi says its Token Services blockchain is "private/permissioned" and "owned and managed by Citi." Clients do not need to host a node.
The bank controls access, validators and upgrades, and carries that operational risk.
JPMorgan calls JPMD "the first-of-its-kind permissioned deposit token," eventually for its institutional clients only. Its Kinexys unit, in blockchain since 2015, also offers deposit accounts on its private blockchain.
On a public chain, the bank controls the token contract but not the network. Ordering, finality and chain upgrades sit with others.
For Group 1 status, Basel tests the network as well as the token. All transactions and participants must be traceable, and the network's degree of access is a key element (SCO60.17).
In December 2023, the Committee said cryptoassets on permissionless blockchains "create risks that cannot be sufficiently mitigated at present." It is now reviewing targeted elements of the standard, with an update expected by the end of 2026.
Our permissioned vs permissionless comparison covers the network choice in depth.
Attack Surface Compared
For a bank, the threats split by who owns them.
| Threat | Bank's own tokenized deposit | Stablecoin the bank holds |
|---|---|---|
| Mint key stolen | Unauthorized tokens; the bank owns the cleanup | Issuer's incident; the holder is exposed to it |
| Wrongful freeze | The bank's own process | Issuer decides; the holder cannot lift it |
| Malicious upgrade | The bank's change control | The issuer's admin key |
| Ledger outage | The bank's nodes, or the chosen chain | The chain the holder uses |
| Redemption | The bank's own liquidity | The issuer's reserves and redemption process |
| Sync errors | Token ledger vs core ledger | Wallet balances vs the bank's books |
Two risks are common to both. The bank's own wallets need key custody, a signing policy and monitoring, and every token balance must reconcile with the core ledger.
Which Fits Which Use Case
These fits are Guardian's reading, not regulatory guidance.
- Moving clients' money between accounts, 24/7: a tokenized deposit on a ledger the bank controls.
- Paying counterparties on a public chain: a permissioned deposit token, or a stablecoin they already accept.
- Holding a stablecoin for settlement: a counterparty exposure. Diligence the issuer and watch its contract roles.
- Issuing a stablecoin: under GENIUS, an approved subsidiary with reserves and lawful order capability.
Whichever you choose, map every admin role before launch.
How Guardian Helps
Guardian's institutional practice advises on custody, signing, chains, bridges and contract design while they are still decisions.
The Digital Asset Assurance Pilot includes an architecture assessment. It maps who can upgrade, pause, mint, set parameters or move funds, and whether that sits behind a threshold or a single key.
Its standards alignment module reads the GENIUS Act as demands on the design. The freeze, seize or burn requirement sits in the token contract, so it has to be designed in before launch.
Frequently Asked Questions
Are tokenized deposits FDIC insured?
An FDIC proposal from April 2026 would make it explicit: a tokenized product that meets the statutory definition of a deposit gets the same insurance coverage as any other deposit. The proposal is not yet final.
Is a deposit token the same as a stablecoin?
Not under US law. The GENIUS Act excludes deposits, including those recorded using distributed ledger technology, from the definition of a payment stablecoin. JPMorgan presents its JPMD deposit token as an alternative to stablecoins.
Can a bank issue a stablecoin itself?
The GENIUS Act's list of permitted issuers names a subsidiary of an insured depository institution, approved under section 5, not the institution itself. Deposits, including tokenized ones, sit outside the stablecoin definition.
Who can freeze a stablecoin a bank holds?
The issuer. In Circle's FiatToken design, a blacklister role can block transfers to or from any address, and Circle controls all roles. The GENIUS Act requires permitted issuers to be able to comply with lawful freeze orders.
Sources
- GovInfo: Public Law 119-27, the GENIUS Act, sections 2, 4 and 11 (July 18, 2025)
- Federal Register (GovInfo): FDIC, GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions, proposed rule, 91 FR 18534 (April 10, 2026)
- BIS: Basel Framework, SCO60 Cryptoasset exposures, version effective January 1, 2026 (read November 6, 2026)
- BIS: Basel Committee agrees to consult on targeted revisions to standards on cryptoasset and interest rate risk in the banking book (December 7, 2023)
- BIS: Basel Committee meets to advance supervisory and regulatory initiatives and discuss risks and vulnerabilities to the global banking system (October 1, 2026)
- Circle: stablecoin-evm, FiatToken token design (read November 6, 2026)
- J.P. Morgan: J.P. Morgan launches USD Deposit Token, JPMD, proof of concept for institutional clients on Base (June 2025)
- Citi: Citi develops new digital asset capabilities for institutional clients (September 18, 2023)
- HSBC: HSBC expands Tokenized Deposit Service to the United States (April 13, 2026)
- Guardian: Institutional
- Guardian: Digital Asset Assurance Pilot
Map the keys behind your deposit token
Guardian maps who can mint, freeze and upgrade your token, and reviews the chain and custody choices behind it before launch.