What it means for banks to champion blockchain: The transformation of the financial system demonstrated by Morgan Stanley and MONY

In the second half of 2025, a historic shift in the financial system was quietly underway. It was not a flashy news headline, but a deeper transformation achieved through institutional approval and implementation. Morgan Stanley’s tokenization of bank deposits on a public blockchain, alongside the rollout of the tokenized money market fund “MONY,” signaled that this was no longer just a technological experiment—existing financial systems were seeking new paths to improve efficiency and scalability.

The New Stage of Financial Infrastructure Indicated by Deposit Tokenization

Traditionally, applications of real-world assets (RWA) on blockchain had been limited to tokenized government bonds, money market funds, and structured investment products. However, the most critical and heavily regulated asset class in the financial system—commercial bank deposits—had always remained confined within the traditional banking infrastructure.

By December 2025, this situation fundamentally changed. Morgan Stanley (officially JPMorgan Chase & Co.) announced the full deployment of a deposit-based token, “JPM Coin (JPMD),” on Coinbase’s Ethereum Layer 2 network “Base.” Unlike previous internal ledger tests or permissioned network trials, JPMD supported actual institutional-level settlement activities on Base. Whitelisted clients could perform on-chain payments, margin settlements, and collateral transfers 24/7.

This shift is profound. For the first time, deposits on the balance sheets of large global banks operated continuously on a public blockchain environment. It was not merely an evolution of payment technology but a structural evolution of the financial system itself.

Regulatory Advantages of Deposit Tokens Over Stablecoins

Until now, on-chain cash equivalents had been primarily stablecoins. But for regulated financial institutions, stablecoins always existed outside the banking system. There was a fundamental disconnect between stablecoins and regulated financial entities in terms of issuer credit, reserve transparency, and regulatory frameworks.

Deposit tokens are qualitatively different. They directly represent claims against commercial bank deposits, naturally integrating into existing regulatory frameworks, accounting standards, and audit systems. When JPMD reached production readiness on November 12, 2025, successful pilot transactions by major players like Mastercard, Coinbase, and B2C2 demonstrated that this regulatory advantage was not just theoretical but practically achievable.

In other words, while stablecoins are “something,” deposit tokens are an extension of the “banking system” itself.

Scale: Why Large-Scale Banks Are Moving Toward Blockchain

Understanding the systemic importance of deposit tokens requires considering the scale of bank balance sheets.

According to Morgan Stanley’s 2024 Form 10-K annual report, the bank’s total deposits as of December 31, 2024, were approximately $2.406 trillion. Even a small portion of deposit settlement activities migrating to blockchain infrastructure would surpass most existing on-chain RWA products by a wide margin.

In contrast, tokenized government bonds and money market funds have grown rapidly in recent years, but their total on-chain value remains in the hundreds of billions of dollars. Commercial bank deposits operate in a different dimension—trillions of dollars—within the financial system.

This scale difference explains why major banks felt compelled to lead on blockchain adoption. Even modest efficiency gains, when applied at the trillion-dollar scale, can have a dramatic impact on the entire system.

On-Chainization of Money Market Funds Completes the Financial Structure

If deposit tokens provide the “settlement layer,” the lack of yield-generating assets has long been a weakness of on-chain financial structures. To fill this gap, Morgan Stanley Asset Management announced the first tokenized money market fund, “My OnChain Net Yield Fund (MONY),” on the Ethereum network on December 15, 2025.

MONY is structured as a Regulation D (506©) private placement fund, accessible only to qualified investors, with assets limited to U.S. Treasuries and repurchase agreements. Morgan Stanley invested $100 million of its own capital initially, enabling investors to hold U.S. dollar-denominated income assets directly on-chain within a fully compliant framework.

The significance of this combination is clear. With deposit tokens (payment layer) and money market funds (income layer) interacting within the same blockchain environment, the flow of funds—previously confined within the banking system—became possible on-chain as well.

Data from the RWA Market Demonstrates the Shift from Pilot to Operational Phase

Quantitative data clearly shows that RWAs are no longer in the pilot stage.

According to RWA.xyz, as of December 25, 2025, the on-chain RWA assets under management had reached a distribution asset value of $19.1 billion, with a total asset value of $414.66 billion and 592,638 asset holders.

Of particular note is the government debt segment, which is most closely aligned with “on-chain liquidity management.” At the same time, the total on-chain value of tokenized government bonds was $9 billion, covering 62 assets and 59,214 holders, with a 7-day annualized yield of 3.82%. This indicates that on-chain assets are acquiring similar functional attributes to traditional cash management tools.

Why the Focus on Financial Efficiency Converged in 2025

Looking at the broader macroeconomic context, the surge in bank on-chain activities in 2025 was driven by clear economic factors.

According to the Federal Reserve’s H.8 statistical release, as of December 10, 2025, the total deposits in the U.S. commercial banking system reached approximately $18.5 trillion. In such a large financial system, technological improvements like enhanced settlement efficiency, 24/7 operation, and optimized collateral reuse naturally became part of institutional investors’ evaluation criteria.

From a systemic perspective, the emergence of deposit tokens and on-chain money market funds was less a technological experiment and more a pragmatic strategic choice by traditional financial institutions to improve efficiency and structure.

The Next Stage: From Tokenization to Financial Infrastructure

By examining JPMD and MONY together, it becomes clear that these are not isolated product launches but part of a coherent institutional-level on-chain financial pathway.

Deposit tokens transform bank liabilities into a 24/7 on-chain liquidity layer. Tokenized money market funds provide low-risk, compliant U.S. dollar income assets within the same environment. The expanding pool of tokenized government bonds supports collateral and liquidity infrastructure.

This series of developments from November to December 2025 signals that the financial system has adopted a new paradigm. Real-world assets have evolved from “tokenizable objects” to components of a “sustainable, operational financial system on a public blockchain.” Over time, they will naturally integrate into institutional clearing, liquidity management, and asset allocation logic.

This shift is not merely a technological victory but a transition to a new stage of the financial system.