Stablecoins are unlikely to be fully replaced by tokenized treasuries, according to a research report from JPMorgan released on Thursday.

JPMorgan indicated that while tokenized treasuries could potentially take over most of the idle cash in stablecoins, a complete transition seems improbable due to the regulatory challenges faced by tokenized assets like BUIDL, which are classified as securities. This classification subjects them to stricter regulations compared to stablecoins.

The research highlights that the liquidity in stablecoins is substantially higher than in tokenized treasuries, which remains a significant advantage for stablecoins in the market.

A stablecoin is designed to maintain a consistent value, typically pegged to major currencies like the U.S. dollar or commodities like gold.

Despite the potential for tokenized treasuries, JPMorgan concluded that they are likely to capture only a minor fraction of the overall stablecoin market. The bank noted the challenge of calculating the amount of inactive cash within stablecoins; however, it is believed that it doesn’t constitute a majority of the stablecoin ecosystem.

Analysts from JPMorgan, led by Nikolaos Panigirtzoglou, emphasized that:

• This deep liquidity supports seamless trading.
• Tokenized treasuries will face ongoing challenges regarding market adoption due to their lower liquidity.

For more information, you can read the in-depth analysis here: Stripe's Acquisition of Bridge Validates the Usage of Stablecoins: Bernstein.