The story around digital assets is moving from disruption to integration. A policy insight paper by Stephen G. Cecchetti and Kermit L. Schoenholtz, “Crypto, tokenisation, and the future of payments,” argues that a convergence is already happening. At the center of this shift is what the authors describe as crypto’s “holy trinity”: blockchains, distributed ledgers, and tokenisation. These tools are increasingly being used by important financial institutions, including banks and asset managers to upgrade existing payment and settlement systems.
Decoding the Shift: A Structural Analysis
The paper looks past price cycles and focuses on design. It separates open, public ledgers (like Bitcoin) from permissioned systems. Public networks maximize open access; permissioned ledgers maximize governance, compliance, and predictable performance. Using that lens, the authors compare stablecoins like USDT and USDC with institutional alternatives now arriving: tokenised deposits (such as JPM Coin) and tokenised money market funds (like BlackRock’s BUIDL). They assess tradeoffs across core dimensions including settlement speed, yield, operational resilience, and regulatory fit. The argument is that programmable ledgers are graduating from niche rails toward real payment infrastructure.
The Findings: Tech Wins, Even if Coins Struggle
Bitcoin and Ether behave more like stores of value than daily payment tools. Volatility makes pricing difficult, and fees can jump when networks are congested. Yet the technology underneath, largely tokenisation, is turning assets into distinct digital representations that can move on programmable rails. Tokenisation enables smart contracts that automate settlement logic. A common example is “delivery versus payment,” where the asset and the cash leg exchange together, reducing counterparty risk and speeding finality. This is why major institutions increasingly hire engineers and build systems that borrow crypto’s plumbing without importing crypto’s volatility.
Two innovations stand out as practical upgrades to the basic stablecoin model:
- Tokenised Deposits: Many stablecoins pay no interest and do not provide deposit insurance. Tokenised deposits are bank liabilities issued inside regulated frameworks, so they can inherit established safeguards like supervision, KYC/AML controls, and risk management. Products like JPM Coin aim to provide near-instant settlement while retaining the safety profile and integration benefits of a regulated deposit.
- Tokenised Money Market Funds (MMFs): Products such as BlackRock’s BUIDL bring yield on-chain while being backed by conservative assets like US Treasuries. This gives investors a way to keep capital tokenised without giving up returns, and it reduces the incentive to park large balances in non-yielding stablecoins simply for convenience.
The Policy Environment: The US as a “Crypto Superpower”
Policy is moving alongside adoption. US leaders have signaled an ambition to make the country a hub for crypto and digital assets. Proposals such as the GENIUS Act aim to legitimize payment stablecoins by tightening requirements around reserves and anti-money laundering obligations, pushing them closer to the banking perimeter.
The paper also flags a policy paradox. If US-dollar stablecoins replaced physical cash at scale, the US Treasury could lose substantial seigniorage revenue, with estimates around $40 billion annually. Meanwhile, tokenised deposits can look cleaner from a supervisory standpoint because they rely on existing frameworks like KYC and AML, which makes them easier to scale without creating new, untested rescue mechanisms.
Conclusion: The Best of Both Worlds
We are nearing a tokenisation tipping point. Traditional finance is no longer only observing; major institutions are partnering with crypto-native firms and building ledger-based systems for internal markets and settlement.For the crypto sector, that is not a defeat. It is evidence that the most durable output of the last decade is the architecture. Instruments will evolve, from stablecoins to tokenised deposits and tokenised funds, but the direction is consistent: payments are moving toward systems that are programmable, near-instant, and tokenised, combining crypto’s technical advances with the stability and governance of the banking system.