A tokenised deposit is a bank's debt and a stablecoin is a claim on a reserve pool
A tokenised deposit stays on the bank's balance sheet, where it can be lent against and falls under banking law. A licensed stablecoin sits on a separate issuer's balance sheet against a ring-fenced pool of safe assets that cannot be lent, under a stablecoin law. Hong Kong and Singapore regulate the two under separate regimes, and HSBC now runs one of each.
- Problem
- A bank can put its deposits on a ledger, or a licensed issuer can issue a stablecoin backed by reserves. For the holder, the bank and the regulator, what differs?
Both instruments are Hong Kong dollars or US dollars on a ledger, and both move between wallets at any hour. The difference is whose debt the holder owns. A tokenised deposit is money the bank owes its customer, recorded on a ledger instead of a core banking database, and the bank can lend against it as it lends against any deposit. A licensed stablecoin is money a separate issuer owes the holder, backed one for one by cash and short government debt held on trust, which the issuer may not lend. Hong Kong and Singapore regulate the two under separate regimes.
The problem
Banks in Hong Kong and Singapore now offer both instruments, sometimes from the same group. HSBC launched a Tokenised Deposit Service for corporate clients in Hong Kong in May 2025 (pilot entry). On 10 April 2026 the Hong Kong Monetary Authority (HKMA) granted HSBC one of the first two stablecoin issuer licences under the Stablecoins Ordinance (Wire). HSBC says it will issue a Hong Kong dollar stablecoin in the second half of 2026 through PayMe and its mobile banking app (HSBC release, 10 April 2026). The other licensee, Anchorpoint Financial, is a Standard Chartered subsidiary (pilot entry).
For a treasurer choosing a settlement asset, a fund deciding what to hold, or a regulator writing capital and conduct rules, the two look alike on the screen. Hong Kong’s Securities and Futures Commission (SFC) treats them alike in one place: its May 2026 circular takes both licensed stablecoins and tokenised deposits out of the rules for crypto funds (Wire). The Monetary Authority of Singapore (MAS) is consulting until 16 October 2026 on the law for its stablecoin licence (Wire), and it excluded tokenised deposits from that framework in 2023. The question is what the holder, the bank and the regulator each get from one rather than the other.
How it works
Some terms first. A ledger is a record of who holds what. A token is an entry on a ledger that represents one unit of an asset and moves between accounts under rules written into the ledger. A wallet is the account on the ledger that holds tokens, controlled by a cryptographic key. Settlement is the transfer that discharges a payment obligation, and finality is the point after which it cannot be reversed. Reserves are the assets a stablecoin issuer holds to pay holders back.
A tokenised deposit payment
Follow the first cross-bank transfer HSBC reported in the HKMA’s EnsembleTX pilot. On 13 November 2025 HSBC moved HKD 3.8 million of tokenised deposits for Ant International from its wallet at HSBC to its wallet at another Hong Kong bank (HSBC release).
1. Before the payment. Ant International holds a deposit at HSBC. On HSBC’s own ledger, part of that deposit is recorded as tokens in a wallet. HSBC has not named the ledger technology (pilot entry). ChinaAMC (HK), which uses the same HSBC service for its fund’s deposits, says such tokenised deposits remain conventional bank deposits in all legal and prudential respects (ChinaAMC release, 21 September 2026). The tokens are an HSBC liability, and the cash behind them is whatever HSBC has done with it: loans, securities, reserves at the HKMA.
2. The transfer. HSBC’s service connects to an HKMA-run interoperability layer that links banks’ tokenised deposit platforms (HSBC release). HSBC debits Ant International’s tokens, and the receiving bank credits new tokens to Ant International’s wallet there. HSBC’s deposit liabilities fall by HKD 3.8 million and the receiving bank’s rise by the same amount.
3. Interbank settlement. HSBC now owes the receiving bank HKD 3.8 million. The HKMA says interbank settlement of EnsembleTX transactions runs initially through the HKD Real Time Gross Settlement (RTGS) system, where banks hold accounts with the HKMA, and will move to tokenised central bank money on a 24/7 basis (HKMA release, 13 November 2025). When the RTGS transfer completes, the payment is final in central bank money. The Bank for International Settlements (BIS) describes this as the core of the two-tier system: the payer’s account is debited, the payee’s is credited, and the banks settle on the central bank’s balance sheet (BIS Annual Economic Report 2025, chapter III).
4. Redemption. A tokenised deposit is redeemed by turning it back into an ordinary deposit at the same bank, or by paying it out through the usual channels. No reserve pool is sold, because the token was the deposit all along.
A stablecoin payment
Follow a payment in HKDAP, Anchorpoint’s Hong Kong dollar stablecoin, issued on Ethereum mainnet (pilot entry).
1. Issuance. A corporate client of an authorised distributor, such as OSL or Standard Chartered (pilot entry), pays Hong Kong dollars from its bank account. Anchorpoint mints HKDAP to the client’s wallet, which a distributor must first have whitelisted (Anchorpoint user alert). HKMA rules require the issuer to accept funds only from bank accounts in the customer’s name and send tokens only to wallets registered to the customer (HKMA guideline on licensed stablecoin issuers, para 6.5.9). The Hong Kong dollars go into the reserve pool.
2. The reserve pool. The pool must be worth at least the par value of all HKDAP in circulation at all times (para 2.2.1). It may hold only cash, bank deposits of up to three months, government and central bank debt maturing within a year, overnight reverse repos against such debt, and funds that hold only these (para 2.3.1). It must be segregated from the issuer’s own assets under a trust (paras 2.5.1 and 2.5.2). Anchorpoint’s reserves are held on trust by Standard Chartered Trustee (Hong Kong) (pilot entry). The issuer may pay holders no interest (para 2.6).
3. The transfer. The client sends HKDAP to a supplier’s wallet. The token contract on Ethereum checks that both wallets are whitelisted, debits one and credits the other. Anchorpoint’s balance sheet does not change and the reserve pool is untouched: the same liability now has a different holder. No bank and no central bank takes part in the transfer. On Ethereum, a transfer is final when the block containing it is finalised by the network’s validators (ethereum.org: proof of stake).
4. Redemption. The supplier sends HKDAP back through a distributor. Anchorpoint burns the tokens, draws on the reserve pool and pays Hong Kong dollars to the supplier’s registered bank account. The HKMA expects valid redemptions to be processed within one business day (para 3.3.3). If the issuer fails, holders have the right to have the reserve pool sold and shared pro rata, and to claim any shortfall from the issuer (para 3.3.1).
Side by side
| Tokenised deposit (Hong Kong) | Licensed stablecoin (Hong Kong) | |
|---|---|---|
| Holder’s claim | On the bank, as a depositor | On the issuer, backed by a reserve pool held on trust |
| Legal regime | Banking Ordinance; excluded from the stablecoin definition (Stablecoins Bill, clause 3(2)(e)) | Stablecoins Ordinance and the HKMA guideline |
| What backs it | The bank’s whole balance sheet, including loans | Cash, short deposits and short government debt only (para 2.3.1) |
| Can the money be lent on | Yes, as with any deposit | No |
| Interest to holder | Not addressed by the stablecoin rules | Prohibited (para 2.6) |
| Who can hold it | The bank’s onboarded clients (pilot entry) | Whitelisted wallets during HKDAP’s first phase (pilot entry) |
| Ledger in current services | HSBC’s own private network | Ethereum mainnet (HKDAP) |
| Interbank leg | HKD RTGS, moving to tokenised central bank money | None; the token moves on the chain |
| Redemption | Conversion to an ordinary deposit | Par, within one business day (para 3.3.3) |
Deposit insurance is less clear. Hong Kong’s Deposit Protection Scheme protects deposits in personal and company accounts up to HK$800,000 per depositor per bank, and excludes virtual assets (Deposit Protection Board). Its published coverage rules do not mention tokenised deposits. The Stablecoins Bill added stablecoin reserve deposits held at a bank to the scheme’s list of deposits it does not protect (Stablecoins Bill, Schedule 8, Part 2).
Why it is built this way
The two designs answer different questions about who carries the risk.
A tokenised deposit keeps the bank in the middle. The deposit funds the bank’s lending, so the bank keeps its funding base and its interest margin, and the regulator keeps the supervisory tools it already has: capital, liquidity and resolution rules. The Basel Committee’s standard on banks’ cryptoasset exposures reflects this. It puts tokenised traditional assets in Group 1a and treats them like the untokenised asset, and puts stablecoins in Group 1b, open only to stablecoins from supervised issuers that pass a redemption risk test (BIS Financial Stability Institute summary).
A stablecoin separates payment from lending. The reserve rules mean the holder’s money cannot fund loans, so the holder does not rely on the issuer’s credit quality, only on the reserve pool and the trust. The cost is what the BIS calls a cash-in-advance constraint: every new stablecoin requires full payment upfront, whereas a bank can expand its balance sheet to meet payment needs (BIS Annual Economic Report 2025, chapter III). The issuer earns the yield on the reserves and pays the holder nothing.
Singapore’s regulator drew the line on these grounds. In its 2023 response, MAS noted respondents’ view that tokenised bank liabilities follow the fractional reserve banking model while stablecoins are fully collateralised, and it excluded tokenised bank liabilities from the stablecoin framework because of the differences in their value-stabilising mechanisms and the risks they pose to holders (MAS response, 15 August 2023, paras 2.12 and 2.14). Hong Kong did the same in its statute: a deposit under the Banking Ordinance is not a stablecoin (Stablecoins Bill, clause 3(2)(e)).
HSBC runs both, and its own account is that each serves a different customer. Its release sets the stablecoin for retail and merchant payments through PayMe and its mobile app, plus tokenised investment subscriptions, alongside tokenised deposits for corporates and digital bonds for institutional investors (HSBC release, 10 April 2026). Nothing in the rules enforces that split: a corporate can hold a stablecoin, and a bank can offer tokenised deposits to retail customers.
There is also a defensive reason. Money that a customer moves out of an HSBC deposit into another issuer’s stablecoin leaves the group. Money moved into HSBC’s own stablecoin stays with HSBC, even if it no longer funds loans. No HSBC or HKMA document describes this motive; it is an inference from HSBC holding both licences, and HSBC has published no volumes for either product that would show deposits moving.
In our markets
Hong Kong is the only one of the three markets with both instruments live or licensed. HSBC’s Tokenised Deposit Service runs for corporate clients and has been connected to EnsembleTX since November 2025 (pilot entry). Seven banks take part in EnsembleTX, and the HKMA plans CBDC settlement and 24/7 operations by around the end of 2026 (pilot entry). ChinaAMC (HK) paid for a tokenised fund subscription with a tokenised deposit under EnsembleTX, and its fund’s underlying deposits are now tokenised with HSBC (pilot entry).
On the stablecoin side, Anchorpoint opened HKDAP to institutions, corporates and professional investors through authorised distributors on 12 August 2026, with retail access targeted for as early as the end of 2026 (pilot entry). As of 23 September 2026 Anchorpoint reported HKDAP in circulation of HK$1,006,890 against reserves of HK$2,110,045 (same entry). HSBC’s stablecoin is due in the second half of 2026.
Hong Kong’s intermediary rules favour licensed stablecoins over other tokens: the SFC and HKMA circulars of 27 May 2026 exempt them from token liquidity tests and client exposure limits, and let banks and brokers hold client stablecoins with the issuer (Wire).
Singapore has tokenised deposits in production and no licensed stablecoin yet. DBS runs DBS Token Services for institutional clients on its own permissioned Ethereum Virtual Machine (EVM) chain, and on 5 September 2026 completed a weekend US dollar payment with Citi using tokenised deposits over the Swift Digital Ledger (pilot entry). MAS’s stablecoin framework, settled in 2023, requires reserves in segregated accounts on trust and redemption at par within five business days (MAS response, para 4.3 and Annex A). The September 2026 draft law adds a ban on interest and powers over stablecoins MAS does not license (Wire). MAS’s BLOOM initiative, launched on 16 October 2025, works with industry on settlement in both tokenised bank liabilities and regulated stablecoins (MAS release).
India has no stablecoin framework, and the Reserve Bank of India argues against private stablecoins and for its own central bank digital currency (State of Play: stablecoin rules).
The case against
Against stablecoins: they break the singleness of money. The BIS argues that stablecoins fail three tests for the mainstay of a monetary system (BIS Annual Economic Report 2025, chapter III). On singleness, a stablecoin carries its issuer’s name and can trade away from par, so one Hong Kong dollar in HKDAP need not equal one in another issuer’s coin. On elasticity, the cash-in-advance constraint means supply cannot expand to meet payment needs. On integrity, stablecoins on public chains can move to unhosted wallets where users are not identified. The BIS proposes instead a unified ledger holding tokenised central bank reserves, tokenised deposits and tokenised government bonds, where banks settle with each other in central bank money.
Against tokenised deposits: they stay inside the bank. The BIS itself lists what stablecoins offer: anyone with an internet-connected device can hold them, they are programmable, and they may lower the cost of cross-border payments (same chapter). A tokenised deposit reaches only the bank’s own onboarded clients, and moving it to another bank needs an interbank link such as EnsembleTX. Issuers argue on these grounds: HSBC cites PayMe’s 3.3 million users as the channel for its stablecoin (HSBC release, 10 April 2026), a reach its corporate tokenised deposit service does not have.
A non-ledger alternative: the existing rails. Hong Kong banks already settle with each other in central bank money through RTGS, and EnsembleTX itself still settles interbank through RTGS (HKMA release, 13 November 2025). What either token adds over a bank transfer is 24/7 settlement between wallets and programmability, and HSBC’s claims for both rest on its own releases.
The BIS objection bites hardest in Hong Kong on integrity, not singleness. On singleness, a licensed issuer must redeem at par within one business day and hold reserves on a trust that survives its insolvency (HKMA guideline, paras 3.3.1 and 3.3.3), which narrows the room for a coin to drift from par. The elasticity limit is built into any fully reserved design and is the price of keeping reserves out of lending. The integrity concern, stablecoins moving to unhosted wallets where no one is identified, is the one Hong Kong’s current design answers directly: HKDAP moves only between whitelisted wallets (pilot entry), and Singapore’s draft law would require licensed issuers to be able to trace, freeze and burn tokens (Wire).
That answer holds only while the whitelist does. Anchorpoint plans retail access as early as the end of 2026, and HSBC’s stablecoin is aimed at retail from the start. If either opens to wallets no distributor has verified, the integrity objection returns in full.
For Ethereum
The two Hong Kong instruments sit on different kinds of ledger. HKDAP is an ERC-20 token on Ethereum mainnet behind an EIP-1967 upgradeable proxy, with transfers limited to whitelisted wallets and freeze and blacklist functions in the contract (pilot entry). HSBC’s tokenised deposits run on a private network whose technology HSBC has not disclosed, and DBS’s run on a private EVM chain that only DBS clients can use (pilot entry).
This follows from the legal difference. A stablecoin is a bearer claim on a reserve pool, so it can move on a public chain between holders the issuer has approved, with no bank in the path. A tokenised deposit is a bank liability that has to be recorded against a named customer of that bank, and the interbank leg runs through the central bank, so the bank keeps the ledger. The Singapore draft law would require licensed issuers to be able to trace, freeze and burn tokens on-chain (para 3.22 of the consultation paper), which the fiat-backed stablecoin contracts on Ethereum already support (Wire).
HSBC has not said which chain its stablecoin will use. If a bank that keeps its tokenised deposits on a private network issues its stablecoin on Ethereum, that would show the split holding in practice: public chains for the reserve-backed instrument, private ledgers for the deposit.
What to watch
- HSBC’s stablecoin launch, due in the second half of 2026: its chain, whether wallets are whitelisted, and whether corporates can hold it.
- 16 October 2026: comments close on Singapore’s Payment Services Act amendments, followed by the Notice on trace, freeze and burn capabilities.
- Around the end of 2026: the HKMA’s planned move of EnsembleTX interbank settlement from RTGS to tokenised central bank money.
- As early as the end of 2026: Anchorpoint’s retail launch of HKDAP, and whether the whitelist stays.
- The SFC’s Code on Unit Trusts and Mutual Funds FAQ on stablecoin and tokenised deposit holdings, which now governs those assets in authorised funds.
- Any statement from the Hong Kong Deposit Protection Board on whether tokenised deposits are protected deposits.