Global Regulation of Stablecoins and Tokenized Deposits Remains Fragmented in 2026

The passage of the US GENIUS Act in July 2025, the full rollout of the EU’s Markets in Crypto-Assets (MiCA) framework, and new stablecoin ordinances in Hong Kong and the UAE have collectively produced more regulatory architecture around stablecoins and tokenized deposits than at any previous point in financial history. But more rules have not meant more alignment.

Across the world’s major financial centres, the definition of what a stablecoin is, who can issue one, and how it must be backed differs materially. Tokenized deposits sit in an even more ambiguous space, treated as bank liabilities in some jurisdictions and as novel digital instruments requiring fresh oversight in others.

The result is a patchwork that institutions operating across borders must navigate daily, and one that raises fundamental questions about whether digital money can ever truly scale globally without common infrastructure to settle it.

Milestone Year That Did Not Resolve the Core Problem

The GENIUS Act, signed into law on July 18, 2025, established a regulatory framework for payment stablecoins and was the first piece of federal legislation of its kind in the United States. It requires 100% reserve backing with liquid assets such as US dollars or short-term Treasuries, and mandates monthly public disclosures of reserve composition. The Senate passed it 68 to 30 with bipartisan support, with seventeen Democratic senators joining 51 Republicans. It was a rare alignment in Washington and a signal of how seriously digital money is now taken at the policy level.

Europe had already built a different architecture. Under MiCA, stablecoins are defined not as stablecoins but as e-money tokens (EMTs) or asset-referenced tokens (ARTs), with only e-money institutions or credit institutions permitted to issue EMTs, and ART issuers required to be EU-based and authorised by regulators.

Hong Kong’s Stablecoin Ordinance, passed in May 2025, requires all issuers of stablecoins backed by the Hong Kong dollar to obtain a licence from the Hong Kong Monetary Authority, with reserves held in high-quality liquid assets equal to the par value of stablecoins in circulation. The UAE operates a layered approach, with the Central Bank regulating fiat-backed stablecoins at the federal level while regional bodies including VARA, FSRA, and DFSA govern activity in their respective free zones.

Common principles do exist across these regimes: mandatory licensing, AML and KYC controls, and one-to-one fiat reserve backing are near-universal requirements. But the definition of permitted issuers, the treatment of foreign entities seeking market access, and the scope of what counts as a payment instrument all diverge in ways that create genuine operational complexity for global institutions.

Tokenized Deposits and Where They Fit

Tokenized deposits add a further layer of complexity. Unlike stablecoins, which are issued by a separate entity and backed by reserve assets, tokenized deposits are digital representations of existing bank deposits governed by the same frameworks that apply to deposit-taking institutions. Regulatory treatment varies significantly: in some jurisdictions they fall cleanly within existing banking law; in others the on-chain element introduces uncertainty about settlement finality, ownership rights, and insolvency treatment.

Many institutions continue to explore stablecoins, CBDCs, and deposit tokens in parallel, with each presenting different risk and regulatory trade-offs, and usage of multiple digital payment types across different use cases is widely expected to continue. JPMorgan has run deposit token tests under its Kinexys platform; HSBC has piloted a tokenized deposit service. Both represent commercial bank money, not central bank money, which matters enormously for how settlement risk is assessed.

Central Bank Money as Settlement Anchor

Wholesale digital asset infrastructure provider Fnality raised $136 million in a Series C round in September 2025, backed by Bank of America, Citi, WisdomTree, Goldman Sachs, Barclays, BNP Paribas, DTCC, Euroclear, State Street, and UBS. Fnality operates the Sterling Fnality Payment System, the world’s first regulated DLT-based wholesale payment system, which launched in December 2023 and received settlement finality designation from the UK government in December 2024.

Simone Cortese, Chief Product Officer at Fnality, told CCN that regulatory fragmentation around stablecoins and tokenized deposits is not primarily a problem to be solved by harmonisation alone. It is a risk management problem with a specific solution.

“Central bank money is critical because it is the safest form of money in the financial system and it eliminates credit risk at the point of settlement. Stablecoins and tokenized deposits are not central bank money and therefore they can create credit risk exposures for the commercial banks supporting that activity. Fnality complements those models by providing a risk-free settlement layer for these exposures, anchored in central bank money, allowing digital assets and digital money ecosystems to scale with safety,” Cortese noted.

Cortese’s framing positions the stablecoin and tokenized deposit debate not as a competition between instruments but as a question of what settles the obligations those instruments generate. His answer is that the same central bank reserve anchor that settles traditional interbank obligations must perform the same function in tokenised markets.

“A common settlement layer can reduce fragmentation by providing interoperability between different forms of digital money and market infrastructure, while enabling institutions to settle obligations safely and efficiently. Fnality is designed to sit at that settlement layer, by providing a global set of independent yet interoperable payment infrastructures, one FnPS system per currency and jurisdiction, enabling obligations between financial institutions to be settled on chain in central bank reserves.”

Regulatory Harmonization Cannot Move Fast Enough

State Street’s analysis of the 2025 regulatory landscape concluded that the environment is more navigable than it was but still not fully harmonized, and that the 2026 question is whether jurisdictions can keep translating frameworks into consistently supervised regimes and whether global standards can converge enough to reduce fragmentation without suppressing innovation.

Cortese argues that waiting for harmonization is not a viable strategy for institutions that need to operate now.

“Regulatory divergence makes adoption more complex because institutions need infrastructure that can operate safely across currencies, jurisdictions and regulatory frameworks. The scaling of digital assets will not be driven by technology alone; it will require regulatory approval, integration into bank workflows, and coordination across institutions. To unlock scale, the market needs regulated infrastructure that fits into existing frameworks, supports live operations safely, and enables the efficient movement of liquidity across currencies and jurisdictions.”

Rather than requiring global regulators to agree on a single framework before institutions can operate cross-border, Cortese’s argument is that infrastructure can carry the coordination burden. One payment system per currency, each operating within its own regulatory perimeter but interoperating at the settlement layer – like the kind embedded in Fnality – means divergent national rules need not prevent cross-border settlement.

“Market infrastructures can help bridge these silos by providing a common settlement layer that operates within existing regulatory frameworks rather than requiring full harmonisation. Fnality is structured as a global ecosystem of payment infrastructures, with one system per currency and jurisdiction. That allows it to reflect local regulatory requirements while still supporting a broader multi-currency network for regulated wholesale, cross border settlement.”

Cross-Border Settlement: Where Fragmentation Bites Hardest

Fragmented national adoption and limited interoperability continue to make it difficult for providers to reliably exchange data and settle obligations across borders, and these challenges are expected to persist into 2026 and beyond. For wholesale institutions moving large sums between jurisdictions, the consequences are not abstract. They materialise as timing mismatches, trapped liquidity, and uncertainty about whether settlement is truly final.

Cortese is direct about where the pressure points are:

“The biggest challenges are timing mismatches across jurisdictions, fragmented liquidity, different risk profiles, and the need for settlement certainty across platforms. Fnality helps address these by enabling real-time, atomic, programmable and final settlement in central bank reserves.”

Fnality’s collaboration with DTCC, announced in June 2025, demonstrated how on-chain Payment versus Payment and Delivery versus Payment settlement using a digital representation of central bank reserves can be executed atomically and in real-time within a regulated environment. That kind of institutional-grade proof point matters in a market where scepticism about DLT in production settings has historically outpaced delivery.

Multi-Asset Ecosystem Will Define Digital Money’s Future

Clearer regulatory frameworks, increasing enterprise-grade deployment, and improving interoperability are pushing blockchain from experimental applications toward the foundations of a new digital financial market infrastructure. But the evidence points strongly toward a plural outcome rather than convergence around a single dominant model.

Cortese shares that view:

“The future is more likely to be a multi-asset ecosystem than a single unified model. Different forms of digital money, including stablecoins, tokenized deposits and other regulated digital settlement models, are evolving to serve different use cases, risk profiles and regulatory frameworks. That means market infrastructure must evolve to support interoperability rather than uniformity. What matters most is having a common settlement layer that allows obligations across those ecosystems to settle safely, efficiently and with finality.” 

Coexistence Requires Better Infrastructure, Not a Single Winner

Stablecoins serve retail payments, cross-border remittances, and DeFi liquidity. Tokenized deposits serve commercial banking relationships and institutional liquidity management. Regulated wholesale settlement infrastructure, anchored in central bank money, serves the interbank layer where those obligations ultimately clear. Cortese is clear that none of these should be read as a threat to the others.

“This should not be framed as a winner-takes-all outcome. The end state will likely involve multiple complementary models, each addressing different parts of the ecosystem. Stablecoins and tokenized deposits will continue to evolve under different regulatory and risk frameworks. Fnality’s role is complementary: it sits at the settlement layer, enabling obligations arising across those ecosystems to be settled in central bank reserves onchain, improving settlement quality and reducing risk.”

The challenge for the industry is that this coexistence model demands more from infrastructure, not less. Every form of digital money that becomes institutionally relevant creates new settlement obligations that need to be discharged safely. As the number of models grows, so does the demand for a reliable, risk-free settlement anchor.

Whether regulators in Washington, Frankfurt, Hong Kong, and Abu Dhabi can coordinate enough to let that infrastructure operate seamlessly across jurisdictions remains the defining open question of 2026. What is increasingly clear is that institutions building around regulatory fragmentation are betting on a common settlement layer rather than waiting for a common rulebook.

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