Sami Alkhair, Keith Bear, Markus Bergvinson, Hugo Coelho, Hatim Hussain, Matthew Jones, Lindis Oma, Roman Proskalovich, Christopher Seta and Bryan Zhang.
This timely study explores the evolving market and regulatory landscape of tokenised private money. Drawing on insights from interviews with market participants and policymakers, it documents emerging use cases and examines the challenges of interoperability and programmability. It also explores the shifting regulatory landscape and its role in both enabling and constraining the development of tokenised money.
Produced by the Cambridge Centre for Alternative Finance, in collaboration with Financial Innovation for Impact, this report offers vital insights for policymakers, regulators and market participants seeking to further the development, adoption and interoperability of tokenised money.
Highlights from the report
1
The ecosystem is diverse, with different instruments playing competing and complementary roles
With 24/7 availability, low costs, and bearer-like features, stablecoins are used to settle decentralised finance trades, in crypto exchanges and for cross-border payments. Tokenised deposits are emerging as a viable tool for institutional treasury management, while tokenised money market funds are beginning to compete for specific use cases where yield-bearing features are attractive.
2
Adoption has been largely driven by cross-border payments, but other use cases are emerging
The research reveals that cross-border payments and simple use cases, are followed by treasury management and more complex applications. Regulatory and non-regulatory barriers remain – including privacy concerns and infrastructure limitations – but the pace of adoption is accelerating.
3
A taxonomy that captures the features of different instruments is critical
This study introduces a two-layered approach to classify tokenised monetary claims. Designed to better capture both the diversity and evolving features of existing and emerging instruments, it maps them along four dimensions: nature of the claim, its backing, form and access, alongside additional features relating to business models, technical architecture, and legal and governance properties.
4
Lack of interoperability is a barrier to scaling, while programmability can function as an accelerator of adoption
The research shows that approaches to interoperability differ widely, ranging from consortium-based private networks to public blockchain solutions with added privacy layers. Programmability is already enabling innovative pilot applications, including trade-finance automation and AI-driven treasury optimisation, and its importance is expected to increase over time.
5
The pace of regulatory action is accelerating
The pace of regulatory action is accelerating – particularly following the policy shift in the United States – yet fragmentation remains high. Despite the rollout of international standards for stablecoins and efforts to oversee their implementation, regulatory frameworks remain fragmented and incomplete across jurisdictions. The comparative analysis of stablecoin regulations across five jurisdictions highlights significant areas of divergence, including in reserve and localisation requirements.
6
Regulatory focus is expected to broaden beyond the treatment of stablecoins
Regulators are shifting their attention from the issuance of stablecoins to their use in payments, implications for monetary policy, and the regulatory issues raised by competing instruments. They have started exploring wider questions of infrastructure and design, interoperability, and the role of smart contracts. Their decisions may decisively shape the evolution of the market.
Contributors and reviewers
We would like to thank the following contributors and reviewers:
- Douglas Arner
- Denise Garcia Ocampo
- Gina Pieters
- Marcelo Prates
- Daniel Trinder