Imagine a future where the U.S. dollar isn’t just the world’s reserve currency, but also the native money of the internet. The fight over what form that dollar takes — bank-issued deposit coins or open stablecoins — may determine not only the future of crypto, but the balance of power in global finance itself.
We are standing at a crossroads. On one side, JPMorgan and other banks are pushing “deposit coins,” like the rumored JPMD coin, which are essentially tokenized bank deposits. On the other side, stablecoins like USDC and USDT have already taken off in the wild, enabling trillions in annual payments, most outside of the banking system. Both promise to digitize the dollar. Both could supercharge U.S. financial dominance. But the way they do it — and who benefits — could not be more different.
Stablecoins: The Dollar Without Borders
Stablecoins are one of the most unexpected success stories of the crypto era. Originally designed as a way to move dollars between exchanges, they’ve grown into a $150+ billion market and now function as a parallel dollar infrastructure. They settle more on-chain volume annually than Visa processes globally.
Their power comes from one simple feature: they are permissionless digital cash. Anyone with a phone can download a wallet, acquire stablecoins, and begin transacting globally — no bank account required, no paperwork, no gatekeepers. In parts of the world where banking access is scarce or fragile, this is nothing short of revolutionary.
Consider the possibilities:
- A freelancer in Nigeria can be paid instantly in dollars instead of waiting days and losing value through unstable local banks.
- A Venezuelan family can protect their savings from hyperinflation by holding digital dollars directly on their phones.
- A startup in India can integrate global payments without needing to negotiate with banks, card networks, or expensive remittance services.
This financial freedom without KYC barriers is what makes stablecoins transformative. They flatten the world of money, offering access to anyone, anywhere. In that sense, they democratize the U.S. dollar, spreading it further and faster than any central bank program could ever hope to do.
But there’s an irony. While stablecoin users treat them like cash, the issuers treat them like money market funds. Stablecoins like USDC are backed mostly by U.S. Treasuries. Those Treasuries yield 5% or more. Yet none of that yield flows to the stablecoin user — it flows to the issuer. Circle, Tether, and other stablecoin companies have quietly become some of the most profitable businesses in the world.
The Promise of JPMorgan’s Deposit Coin
Enter JPMorgan. The bank is experimenting with a deposit token, often described as the JPMD coin. Unlike stablecoins, which are issued by non-banks, a deposit token is literally a bank deposit represented on-chain. That means two things:
- It could pay yield. Just like your savings account at JPMorgan, the deposit token could accrue interest directly to holders. That instantly makes it more attractive than USDC or USDT, which pay nothing.
- It carries the safety of a bank deposit. Instead of trusting Circle in Boston or Tether in the British Virgin Islands, you’d be holding a tokenized claim against JPMorgan — one of the most regulated financial institutions on Earth.
Yield is not a small feature. For decades, ordinary savers have accepted that the “bank” captures the benefits of their deposits. In a world where money can move at internet speed, the idea that your money itself should earn while you hold it becomes extremely compelling. If a JPMD coin delivered yield safely and automatically, it could pull trillions of dollars back into the banking system, offering a serious alternative to holding stablecoins.
On paper, that looks like a game-changer. A yield-bearing dollar token backed by JPMorgan’s balance sheet could outcompete every stablecoin in existence. But here’s where the friction comes in.
KYC, Identity, and the Permissioned Reality
Stablecoins feel like cash because you don’t need permission to spend them. But bank law doesn’t work that way. JPMorgan can’t just let tokens fly around the world uncontrolled. U.S. regulations — BSA, AML, OFAC sanctions, KYC/AML checks — all require banks to know who their customers are and monitor transactions for illicit activity.
If JPMorgan pays yield on a token, it must know who is entitled to that yield. That means every wallet that touches a JPMD coin would need to be verified and whitelisted. Transfers would likely only be allowed between KYC’d addresses. In other words, JPMD would look less like USDC and more like a digital extension of the JPMorgan ledger — programmable and real-time, yes, but still tightly permissioned.
For institutional settlement, that’s exactly what clients want. For DeFi, global remittances, or retail usage, it’s a non-starter. The very feature that makes JPMD appealing (yield) also guarantees it won’t be free-floating digital cash.
Stablecoins as a Geopolitical Force
Stablecoins don’t just matter in crypto — they matter geopolitically. Every time someone mints USDC, Circle buys U.S. Treasuries. Every time someone holds Tether, they’re indirectly holding U.S. government debt. Stablecoin issuers have become significant buyers of Treasuries, quietly helping finance America’s deficit.
This creates a fascinating alignment of incentives. Stablecoins increase demand for U.S. government debt, while at the same time spreading the dollar’s reach across the globe. A shopkeeper in Nigeria, a developer in Argentina, or a student in Turkey can all hold stablecoins as a hedge against local inflation. That deepens dollarization and reinforces U.S. financial dominance — what some call dollar hegemony by code.
But stablecoins also pose a threat. If billions of dollars sit in USDC or USDT rather than JPMorgan savings accounts, banks lose deposits. And in banking, deposits are power. They are the raw material of lending, credit creation, and profit. Stablecoins siphon that away into offshore wallets and smart contracts.
Why JPMorgan Wants a Deposit Coin
So why is JPMorgan experimenting here? Three main reasons:
- Defense against disintermediation: If stablecoins eat deposits, banks lose relevance. A deposit coin lets JPMorgan meet demand for digital dollars while keeping the funds inside the bank.
- Infrastructure upgrade: Institutional clients want instant settlement and programmable payments. A deposit token can provide that without ceding control to non-bank issuers.
- Regulatory comfort: Policymakers are torn on stablecoins. They like the demand for Treasuries and global dollar dominance, but fear an unregulated shadow banking system. A bank-issued coin is a compromise — innovation inside the regulatory perimeter.
The GENIUS Act and the Two-Tier Future
Enter the GENIUS Act (Guaranteeing Emergency National Infrastructure Using Stablecoins Act), a proposed framework in Washington. It aims to regulate stablecoin issuers by requiring reserves in direct U.S. Treasuries and Fed deposits, making them safe and ensuring they support U.S. government funding.
If passed, it would formalize stablecoins as part of America’s financial architecture — effectively turning them into state-aligned dollar rails. But notice the asymmetry:
- Stablecoins: Open, permissionless, regulated to be safe, but still outside of banks.
- Deposit coins: Closed, permissioned, already regulated as bank deposits, and able to pay yield.
This sets up a two-tier digital dollar system. Stablecoins for global, retail, and frontier use. Deposit coins for banks, corporates, and institutions. The lines may blur, but the split is real.
Bonus Section: Europe, the UK, and the CBDC Dilemma
While the U.S. experiments with both stablecoins and deposit tokens, other countries are rushing to develop Central Bank Digital Currencies (CBDCs). The UK, the EU, and even emerging economies are piloting CBDCs as their answer to digital money. But there’s a problem: they lack the global reserve currency advantage.
Unlike the dollar, the euro and the pound are not deeply embedded in global trade and reserves. A digital euro or digital pound might be efficient domestically, but internationally they face a ceiling: most people outside Europe don’t want euros, they want dollars. Without the natural demand of being the world’s reserve currency, CBDCs risk becoming domestic control mechanisms rather than global money.
Worse, CBDCs are being designed with maximum surveillance and programmability. They offer central banks the ability to track every transaction, set spending limits, impose negative rates, or even restrict purchases. In this sense, European CBDCs may succeed as tools of compliance and control, but fail as tools of global influence.
This contrast is stark: U.S. stablecoins are spreading dollar freedom around the world, while European CBDCs are shaping up as closed-loop, top-down instruments of financial control. That difference explains why, even with advanced CBDC pilots, the euro and pound are unlikely to rival the dollar’s global position. The U.S. has already won the currency game — the only question is whether the digital dollar will be permissionless and open or bank-controlled and closed.
The Paradox of Digital Dollars
We are entering a paradoxical moment:
- Stablecoins expand U.S. financial dominance but threaten banks by draining deposits.
- Deposit coins protect banks and pay yield, but can never be as open or global as stablecoins.
- CBDCs abroad look more like control mechanisms than true currencies of freedom, limiting their global reach.
- Policymakers want both: the dollar everywhere, and banks intact. But these goals pull in opposite directions.
The Bigger Picture: Cash, Control, and Code
When you zoom out, this isn’t just about JPMorgan vs. Circle. It’s about the nature of money itself. Stablecoins show that the world wants digital cash dollars. Deposit coins show that banks and regulators want to preserve control and compliance. CBDCs in Europe and the UK show how governments may try to centralize power through money itself. All three models are colliding, each reflecting different values: freedom, stability, or control.
It’s possible we’ll see coexistence. A permissionless layer of stablecoins enabling global access to the dollar, a permissioned layer of deposit tokens powering institutional finance, and national CBDCs for domestic surveillance and policy control. Together, they might form a fragmented but interconnected ecosystem of digital money.
Final Thought
The dollar’s future is not in question. What’s in question is who controls the pipes.
If JPMorgan and the banks succeed, digital dollars will look like savings accounts with APIs — safe, compliant, and yield-bearing, but tightly permissioned. If stablecoins win, digital dollars will look like internet-native cash — global, permissionless, and unstoppable, but disruptive to banks. If Europe bets on CBDCs, it risks building financial panopticons that few outside their borders will want to use.
The great irony? No matter which form wins, the U.S. government is the biggest beneficiary. Because whether you hold a JPMD coin or a USDC, at the other end of the chain sits the same asset: U.S. Treasuries.
In the end, the fight isn’t really about whether dollars go digital — they already have. The fight is about who captures the power, profits, and freedom of the new dollar economy. And that, more than any blockchain or app, may define the next era of global finance.
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