Between state-issued money and fully decentralized crypto-assets lies another fascinating category: tokenized bank deposits. These are traditional deposits represented as tokens on distributed ledgers, issued by regulated banks. They combine the safety of existing banking systems with the programmability and efficiency of blockchain infrastructure. JP Morgan’s JPM Coin and the Monetary Authority of Singapore’s Project Guardian are examples of how financial institutions are exploring this space. Economically, tokenized deposits could reduce settlement costs and unlock new efficiencies. Politically, they reinforce the role of regulated banks while offering a state-aligned alternative to unregulated private tokens.
Then there are stablecoins, which are digital tokens pegged to a reference asset, usually fiat currency such as the US dollar or the euro, but exist and move on blockchain networks. Stablecoins are generally issued by private entities. They bridge the benefits of crypto (speed, borderless transfer, low transaction cost) with the stability of traditional money. Tether (USDT) and Circle’s USDC are dominant examples. While they can provide a useful service, they also raise regulatory questions. Should private companies be allowed to issue instruments that mimic state money? Stablecoins highlight a core tension between innovation and oversight.
Beyond payment instruments, tokenization is transforming capital markets. Tokenized assets can represent real-world assets such as securities, real estate and commodities on a blockchain. For instance, Pax Gold offers digital tokens backed by physical gold, while Ondo Finance has pioneered tokenized US treasuries. This approach enables fractional ownership, global liquidity and transparent settlement. Economically, tokenization can make capital markets more accessible; politically, it challenges traditional gatekeepers such as central securities depositories and raises questions of jurisdictional control.
On the more experimental side of the spectrum are utility tokens and cryptocurrencies. Utility tokens are native to specific crypto platforms, such as Filecoin for decentralized storage or Binance Coin (BNB) for corporate transaction discounts. They are not designed to function as general money but as access keys or incentives within digital ecosystems. At the farthest edge lie cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH): highly decentralized, censorship-resistant and ideologically rooted in reducing reliance on governments and intermediaries. But, as they have evolved, these cryptocurrencies have increasingly been used for speculation and digital collateral rather than for regular financial transactions given the high cost of transactions. They represent a libertarian vision of money, one that exists beyond borders and state control.
