Tokenised deposits vs stablecoins

Key facts (as of 29 October 2026)

• Definition: the Bank of England's Prudential Regulation Authority (PRA) describes tokenised deposits as "deposit claims represented on programmable ledgers that enable novel techniques such as atomic settlement and smart contracts", and notes that definitions have not yet settled (PRA letter, 18 May 2026).
• UK position: the PRA expects banks to innovate with deposits inside the deposit-taking entity, meeting FSCS depositor-protection rules. A bank group that wants to issue a stablecoin or e-money to retail customers should do so from a separate, insolvency-remote, non-deposit-taking entity with distinct branding (PRA).
• Example: HSBC's Tokenised Deposit Service converts deposits into tokens 1:1 on a private HSBC blockchain for 24/7 transfers within HSBC's network; currencies include EUR, GBP, HKD, SGD and USD, and tokens are covered by deposit insurance in participating markets (HSBC).
• US: the GENIUS Act regime covers payment stablecoins; deposits, including tokenised ones, remain under banking law. See The GENIUS Act and the OCC rule.

Side by side

NoteIn the PRA's description of a transferable deposit token, when the token moves between people, the recipient becomes a customer of the issuing bank. That is the key limit on reach: you can only pay people the bank has onboarded.

How the flows differ

flowchart LR
    subgraph TD[Tokenised deposit]
    A1[Company A, bank customer] -->|token transfer on bank ledger| B1[Company B, same bank's customer]
    end
    subgraph SC[Stablecoin]
    A2[Company A wallet] -->|public chain transfer| B2[Any screened wallet]
    B2 --> R[Redeem or off-ramp via provider]
    end

When each fits

WarningBanks serving high-risk sectors apply the same risk appetite to tokenised deposits as to normal accounts. Tokenisation does not open a closed bank door.

Illustrative example: a group treasury

Illustrative example. The group and figures are invented.

A payments group has entities in London, Hong Kong and Singapore, all banking with one global bank. It moves intragroup liquidity using the bank's tokenised deposits at weekends, keeping balances insured where schemes apply. For supplier payments in Latin America and Asia it uses USDC and USDT through licensed providers. Its treasury policy sets which instrument is used for which flow.

Timeline

Q/A

Is a tokenised deposit a stablecoin?

No. It is a bank deposit recorded on a ledger.

Can a bank issue both?

In the UK, the PRA expects stablecoin issuance to retail from a separate insolvency-remote entity with distinct branding. In the US, the GENIUS Act allows bank subsidiaries to issue payment stablecoins.

Are tokenised deposits always on private chains?

Not necessarily, but many current services, including HSBC's, run on private ledgers.

Does the PRA welcome wholesale stablecoins?

It said risks are less prevalent for wholesale-only use and firms should engage early; the Bank is working to allow stablecoins in its Digital Securities Sandbox.

Sources

• Bank of England PRA, letter on innovations in deposits, e-money and stablecoins (18 May 2026): https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/letter/2026/innovations-in-the-use-of-deposits-emoney-and-regulated-stablecoins
• HSBC, Tokenised Deposit Service: https://www.business.hsbc.com/en-gb/products/tokenised-deposit-service
• Brookings, payment stablecoins vs tokenised bank deposits: https://www.brookings.edu/articles/what-are-the-differences-between-payment-stablecoins-and-tokenized-bank-deposits/
• J.P. Morgan Kinexys, deposit tokens: https://www.jpmorgan.com/kinexys/documents/deposit-tokens.pdf
• private.law, stablecoins: https://wiki.private.law/en/stablecoins