In a wallet all four look identical: a dollar unit that moves on a blockchain around the clock and settles in seconds. Legally four constructions sit behind the same interface — a bank deposit, an obligation of a licensed stablecoin issuer, electronic money, and a share in a money market fund. The wrapper decides who the holder has a claim against, how it is protected, where the holder stands in an insolvency, and whether yield is allowed.
This page is a framework for two decisions: which form to hold digital dollars in for working cash, savings and collateral — and which licensing construction to assemble for a token of your own.
One function, four wrappers
All four forms move dollar value into a programmable entry on a distributed ledger; they differ in whose obligation stands behind the entry. For a tokenised deposit it is a bank — the token legally remains a deposit. For a payment stablecoin — an issuer under a dedicated statute, in the US the GENIUS Act. For an e-money token — a bank or an EMI under the EU's MiCA. Behind a tokenised money market fund stands no monetary claim at all but a security: a share in a portfolio of Treasury bills.
Tokenised deposit: the money stays in the bank
The first US bank deposit on a public blockchain was Avit from Custodia Bank and Vantage Bank Texas, issued on Ethereum mainnet 25 March 2025; since 19 March 2026 the token settles for the Participate platform's network of roughly 600 banks. The giants followed: JPM Coin (JPMD) from Kinexys serves institutional clients on the public L2 Base — the platform has processed $3 trillion-plus, averaging above $5 billion a day — and since 7 January 2026 is being phased onto Canton. Citi Token Services moves billions in dollars and euros on a private ledger with nodes in the US, UK, Singapore, Hong Kong and Dublin. On 25 March 2026 London's Monument Bank was first in the UK to announce tokenised retail deposits on the public Midnight blockchain: a £250 million target, FSCS protection and sterling redemption preserved.
The legal core is the same: the token is the bank's obligation to the depositor, insurance (FDIC in the US, FSCS in the UK) follows the deposit, and the instrument lives outside the stablecoin perimeter — the GENIUS Act expressly excludes deposits from the payment-stablecoin definition. For banks this is a route to on-chain settlement without a separate licence — and without the ban on interest. The flip side: the token circulates only within the bank's or consortium's client perimeter — no free secondary market. The dual-mode Hazel Network architecture (white paper of 18 June 2026) tries to lift that constraint: inside the consortium the token behaves as a deposit, outside it — as a stablecoin. The full case study is in Custodia and Vantage.
Payment stablecoin: the GENIUS perimeter
The GENIUS Act, signed on 18 July 2025, gave the payment stablecoin its first federal definition — a digital asset redeemable at a fixed value. Issuance is reserved for permitted issuers: subsidiaries of insured banks, non-banks supervised by the OCC, and issuers under comparable state regimes. Reserves are 1:1 in cash and short-dated Treasuries with monthly disclosure; paying yield to holders is prohibited; in an insolvency, holders are paid first. There is no state insurance — protection rests on reserve quality and claim priority. The requirements bite on the earlier of 18 months after signing or 120 days after final rules — roughly early 2027. In May 2026 SoFi became the first US national bank with its own stablecoin; Stripe's stablecoin unit is entering via an OCC trust charter. Typology and reserves — in the stablecoins hub.
E-money token: the European version
In the EU a single-currency token is an e-money token under MiCA: only a credit institution or an authorised EMI may issue it, the holder may redeem at par at any time, interest is prohibited, and reserves sit under a safeguarding regime. The transition window closed on 1 July 2026 — an unauthorised issuer faces delisting from regulated EU venues. Significant tokens in a non-EU currency face a payments cap of 1 million transactions or €200 million a day. For an issuer this dictates "EMI plus CASP under one regulator", as assembled in Luxembourg.
The UK runs a parallel circuit: on 22 June 2026 the Bank of England dropped the proposed holding limits (£20,000 per individual) in favour of a temporary £40 billion issuance cap per token; backing is 30% in Bank of England accounts and up to 70% in short gilts, regime live from 2027. The UK client-money perimeter — in the UK safeguarding and crypto regime overview; Asian frameworks — in Asia's stablecoin regimes.
Tokenised money market fund: cash that pays
The fourth form honestly pays interest — because legally it is not a payment instrument but a security: a share in a fund investing in Treasury bills and repo. BlackRock's BUIDL held about $2.5 billion as of August 2026, and the same month BlackRock launched two new tokenised funds designed as eligible reserve assets for GENIUS stablecoin issuers. Franklin Templeton's BENJI grew from $594 million in January 2026 to over $2.5 billion in July, running on seven networks. Circle's USYC held about $2.2 billion as of March 2026, $1.84 billion of it on BNB Chain: Binance accepts USYC as yield-bearing off-exchange collateral for institutional clients. The tokenised Treasuries market hit $11 billion by 13 March 2026.
The main driver is collateral: a yield-bearing token instead of dead cash on margin. On 24 March 2026 BMO, CME Group and Google Cloud unveiled a tokenised cash and deposit platform for clearing collateral, and CME publicly contemplates both stablecoins and tokenised MMFs as margin. The price is securities status: KYC whitelists, subscriptions and minimums, NAV instead of par, and the fund's right to gate redemptions; you cannot pay with such a token. The asset-class context is in RWA tokenisation.
Comparison table
| Form | Legal nature | Issuer | Holder protection | Yield | In insolvency | Access | Where it circulates |
|---|---|---|---|---|---|---|---|
| Tokenised deposit | Deposit — the bank's obligation | Chartered bank | FDIC/FSCS up to the limit | Allowed — ordinary deposit rate | Depositor priority plus insurance | Bank or consortium clients, KYC | Bank perimeter; public chains with whitelists (Ethereum, Base, Midnight) |
| Payment stablecoin (GENIUS) | Claim on the issuer for redemption at par | Bank subsidiary, OCC non-bank, state-licensed issuer | 1:1 reserves, monthly disclosure; no state insurance | Prohibited | First priority against reserves | Open | Public blockchains, exchanges, DeFi |
| E-money token (MiCA) | Electronic money — redemption at par | Bank or EMI | Safeguarded reserves; no deposit insurance | Prohibited | Claim on safeguarded assets | Open in the EU; caps for dollar EMTs | Public chains, CASP venues |
| Tokenised MMF | Fund share — a security | Asset manager | Segregated portfolio with a custodian | Yes — short-Treasuries rate | Portfolio separate from the manager; NAV risk | Qualified/institutional investors, whitelist | Whitelisted chains; collateral on exchanges and in clearing |
Balance-sheet risks: what breaks in each form
For the deposit the risk is the bank itself: above the insured limit the holder is an ordinary creditor; tokenisation does not change that. For the stablecoin and the EMT it is depeg and reserve quality: even full coverage in short Treasuries does not cancel a redemption queue once confidence goes; until GENIUS bites, reserve discipline is down to the individual issuer. For the tokenised MMF the risks are fund risks: NAV floats, the fund may suspend redemptions, settlement is not always instant.
A separate layer is prudential. The Basel SCO60 standard has applied since 1 January 2026: stablecoins on permissionless blockchains fail the preferential Group 1b conditions and fall into Group 2 — with risk weights up to 1250% and an aggregate exposure limit of 1–2% of Tier 1. Hence the banks' strategy: issuing your own deposit token on your own balance sheet beats holding someone else's stablecoin on it.
Working cash, savings or collateral: which form fits which job
Working cash — a regulated stablecoin or EMT, with routing between tokens and fiat outsourced to a provider. Large treasury balances — a tokenised deposit at an insured bank: familiar legal nature plus network speed. Savings cash and trading collateral — a tokenised MMF: short-Treasuries yield and growing acceptance as margin. Tax and CARF treatment of all four forms — in crypto for private wealth.
Bank charter, GENIUS licence, EMI or fund: what to assemble for your own token
Choosing the form means choosing the licence. A bank charter opens the deposit token outside the GENIUS perimeter. A stablecoin requires permitted-issuer status — via a bank subsidiary, an OCC trust charter or a state licence. In the EU: an EMI to issue the EMT plus a CASP for circulation. The fund wrapper takes a registered fund, a manager and a transfer agent. The licensing map — in the regimes overview.
What to watch until 2028
By early 2027 GENIUS is fully in force: part of the deposit-workaround motivation disappears and convergence accelerates — Hazel designs a token that changes legal nature at the consortium boundary, BlackRock — funds as stablecoin reserves. The Bank of England's systemic stablecoin regime starts in 2027. If CME and the clearing houses take tokenised MMFs into live margin, collateral demand becomes the class's main driver. Watch also JPMorgan, Bank of America and Citi with The Clearing House: a shared tokenised deposit network erases the border faster still.
Q/A
How does a tokenised deposit differ from a stablecoin
In the legal nature of the claim. A deposit token is the bank's obligation to a depositor: insurance (FDIC/FSCS) and depositor priority apply, but circulation is confined to the bank's perimeter. A stablecoin is a claim on the issuer for redemption at par: it moves freely across public networks, and protection rests on 1:1 reserves and first-priority claim.
Why do stablecoins pay no interest, and how to earn yield legally
Both the GENIUS Act and MiCA prohibit issuers from paying yield to holders — otherwise the token would become a deposit or fund without the corresponding protections. The legal routes: a tokenised MMF, where yield comes in exchange for securities status, or an interest rate on a tokenised deposit at the issuing bank.
What happens to each form in the issuer's insolvency
Deposit: insurance up to the limit, above it — the depositors' queue. GENIUS stablecoin: holders are paid first out of reserves. EMT: redemption out of safeguarded assets separated from the issuer's own funds. Tokenised MMF: the portfolio sits segregated with a custodian; the manager's insolvency does not touch it — the holder bears NAV risk, not the manager's credit risk.
Can an individual buy BUIDL or BENJI
BUIDL is an institutional product with high minimums via Securitize; BENJI is open to retail investors in several jurisdictions through Franklin Templeton's app. Monument Bank is opening retail deposit tokens in the UK; stablecoins and EMTs can be bought freely but carry no yield.