David Edwards
JPMorgan (JPM) states in a recent report that tokenized treasuries, despite their potential, are unlikely to fully replace stablecoins in the crypto ecosystem. While it is “conceivable” that tokenized treasuries might gradually replace some of the idle cash currently held within stablecoins, regulatory hurdles make a full replacement improbable.
Tokenized treasuries, such as BlackRock’s BUIDL, fall under securities classifications and thus face stricter regulatory constraints than stablecoins, which hampers their usability as collateral within the broader cryptocurrency markets. This regulatory disadvantage, JPMorgan analysts assert, may limit the scope of tokenized treasuries as a viable substitute for stablecoins.
The report highlights that the liquidity advantage held by stablecoins is a crucial factor. With an estimated market cap of $180 billion across multiple blockchains and centralized exchanges (CEX), stablecoins enable low-cost transactions, even on large trades, bolstering their utility in trading and as a liquidity vehicle. By comparison, tokenized treasuries currently suffer from low liquidity—a limitation that could diminish if these products gain market traction.
“Stablecoins continue to dominate the crypto liquidity landscape due to this deep liquidity,” analysts led by Nikolaos Panigirtzoglou noted in the report. Tokenized treasuries may eventually build liquidity, yet a widespread shift from stablecoins to these newer products remains unlikely in the near term, according to JPMorgan.
