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JPMorgan: “Treasury tokenized will replace stablecoins”
By Davide Grammatica
For JPMorgan, the market for tokenized Treasuries may even surpass that of stablecoins, barring regulatory restrictions
JPM and the tokenization of U.S. government bonds
According to financial giant JPMorgan, the market for tokenized U.S. government bonds could soon be worth more than that of stablecoins, challenging its dominance in assets of this nature (“tokenized” assets include, for JPM, stablecoins themselves).
The reasons for this view are rooted in the data of recent times. In the past year alone, in fact, the tokenized Treasury market has expanded to $2.4 billion, growing rapidly and at a higher pace than stablecoins (now at 180 billion in capitalization).
JPM analysts, as understood in their report shared by The Block, point out that these government bonds will never have the capacity to completely replace stablecoins, but they will certainly have the ability to challenge their dominance.
The open challenge to stablecoins
The disadvantage of stablecoins would be the inability of issuers to share the returns of their reserves with users. Of course, otherwise these would immediately be classified as financial assets, which is why a limit on them takes on a regulatory character.
In contrast, tokenized Treasuries allow returns without any particular collateral risk, leaving users with full custody of their funds.
The limitation of these assets is still regulatory in nature, but in relation to adoption. These are in fact, for now, in the U.S., offered only to accredited investors, and the market is not yet open to a retail audience. The entry level of BUIDL, BlackRock’s tokenized fund, for example, is 5 million.
Nevertheless, these could still be a significant alternative in areas such as derivatives trading (BUIDL has already been proposed as collateral on various cex), as well as replace stables in the treasuries of various DeFi protocols.
Of course, estimating the amount of unused money can be very difficult. “As a result, tokenized government bonds may eventually replace only a fraction of the stablecoin universe, “ the analysts pointed out.
