Why JPMorgan Says Tokenized Treasuries Won't Completely Replace Stablecoins

JPMorgan has challenged the notion that tokenized treasuries will fully displace stablecoins in the digital asset ecosystem. The bank’s latest analysis suggests that while products like BlackRock’s BUIDL represent an important innovation in on-chain treasury markets, they will likely capture only a portion of the stablecoin market rather than driving wholesale replacement.

This conclusion hinges on several fundamental structural differences between these two asset types—differences that will likely persist even as tokenized treasury adoption grows over time.

The Regulatory Constraints Limiting Tokenized Treasuries

One of the critical barriers to tokenized treasuries achieving dominance is their classification as securities. This regulatory status places them at a significant disadvantage compared to stablecoins, which enjoy a more favorable classification that doesn’t subject them to the same restrictions.

According to JPMorgan analysts, including researcher Nikolaos Panigirtzoglou, this regulatory framework creates practical limitations. Tokenized treasuries cannot serve as collateral as freely as stablecoins throughout the broader cryptocurrency ecosystem. The compliance overhead and regulatory constraints effectively cap their versatility, meaning even as these products mature, they will operate within defined boundaries that stablecoins don’t face.

JPMorgan estimates that while some “idle cash” currently held within stablecoin reserves might migrate into tokenized treasuries over time, this amount likely represents only a small slice of the total stablecoin market. The bank notes that calculating the precise volume of unutilized capital in stablecoins is challenging, but it’s clear this segment doesn’t constitute the majority of stablecoin holdings.

Stablecoins’ Liquidity Advantage Remains Decisive

Another decisive factor favoring stablecoins is their superior liquidity profile. With a combined market capitalization approaching $180 billion distributed across numerous blockchains and centralized exchanges, stablecoins benefit from robust trading depth that enables seamless transactions even on larger orders.

This extensive liquidity infrastructure supports minimal transaction costs, creating a compelling advantage for traders and developers seeking efficient settlement layers. Tokenized treasuries, by contrast, currently operate with far more limited liquidity. While the bank acknowledges this gap may narrow as these products gain traction and institutional adoption accelerates, the present disparity remains substantial.

The depth and accessibility of stablecoin markets—built over years of growing integration across DeFi protocols and trading venues—represents a structural moat that tokenized treasuries have yet to bridge.

Market Reality: Complementary Rather Than Competitive

The practical implication of JPMorgan’s analysis is that tokenized treasuries and stablecoins will likely develop as complementary rather than directly competitive products. Products such as BlackRock’s BUIDL will serve specific use cases where on-chain yield and regulatory certainty matter more than maximum liquidity and collateral flexibility.

For many participants in the crypto ecosystem, however, stablecoins will continue to serve as the default settlement asset and liquidity medium. The combination of regulatory clarity, market depth, and collateral functionality creates a structural advantage that won’t quickly erode.

As crypto markets continue evolving—evidenced by recent altcoin strength with Ethereum up 9.49%, Solana gaining 7.55%, Cardano advancing 11.31%, and Dogecoin up 8.72% over the past 24 hours—the competition for settlement and collateral assets will intensify. Yet JPMorgan’s thesis suggests that tokenized treasuries will occupy a specific niche within this landscape rather than achieving the universal replacement some proponents envision.