※ This is a working draft and will be updated to the final Daily Crypto Times (DCT) format in 2 days.

Financial Infrastructure War: The Real Battle Between Banks and Blockchain Begins

A major shift is underway in global finance, and this article builds on the previous piece, “The Future of Digital Money: Stablecoins vs. Tokenised Deposits” . Reading that first will help you better understand the contrasting models explored here.

The global financial system is splitting into two distinct paths. One is on-chain finance preferred by traditional banks, and the other is decentralised finance built by blockchain developers. This is not just a matter of technology choice; it stems from the fundamental question of “who operates the network, and who captures control and economic upside?”

SWIFT’s recent move to bring its payment network on-chain with more than 40 global banks is a symbolic turning point. Banks no longer see blockchain as a threat. They are starting to embrace it as a new payment infrastructure they can still control.

As Merlijn The Trader pointed out, what banks are choosing is not crypto, but tokenised deposits. This means putting ‘real money’ from existing bank accounts on-chain, gaining blockchain’s speed while allowing banks to retain both control and economic benefits.

Blockchain builders, on the other hand, have spent the last decade outside the banking system, building a global digital dollar ecosystem based on stablecoins. On the surface, the two models may look similar, but they are built on completely different philosophies about who issues the money, who runs the network, and who captures the value.

This article compares these two models and explores where the future of financial infrastructure may be heading.

---

1) Tokenised deposit-based blockchains: On-chain finance preferred by banks

① Concept

Tokenised deposits represent real deposits held in traditional bank accounts, expressed as tokens on a blockchain. The underlying assets remain on the bank’s internal ledger, while the blockchain is used purely as a transfer and settlement layer.

② Issuance

• Banks issue 1:1 tokens against customer deposits
• The tokens are treated as the bank’s liabilities
• Existing banking regulation applies directly

③ Circulation

• Interbank and cross-border payments are processed on-chain in real time
• 24/7 settlement becomes possible
• KYC/AML remains fully under the bank’s control

④ Payment and settlement

• Payments are executed instantly on-chain
• Settlement is synchronised with the bank’s internal ledger
• Because guarantees, regulation, and supervision remain the same, risk is relatively low

⑤ Who operates the blockchain network?

Tokenised deposits typically run on permissioned blockchains operated by existing financial institutions such as banks, SWIFT, or JP Morgan.

• Validators = banks or other financial institutions
• Network access = restricted to approved participants
• Rules and governance = set by financial institutions and regulators

In short, this is a structure where banks retain both control and economic upside.

---

2) Stablecoin-based blockchains: A global digital dollar outside the banking system

① Concept

Stablecoins are issued by private companies (such as Circle or Tether) as a form of digital dollars outside the traditional banking balance sheet. They are backed by bank deposits, treasuries, or similar assets, but the tokens themselves are not bank liabilities.

② Issuance

• Users deposit dollars, and the issuer mints USDC, USDT, etc.
• The issuer is not a bank, so issuer-specific regulation applies rather than full banking regulation

③ Circulation

• Stablecoins move freely across public blockchains like Ethereum and Solana
• Anyone with a wallet can hold and transfer them
• A DeFi- and globally user-driven ecosystem has emerged

④ Payment and settlement

• Payments are executed instantly on-chain
• Settlement is tied to the issuer’s reserve assets
• There is issuer risk (reserve transparency, operational risk, etc.)

⑤ Who operates the blockchain network?

Stablecoins run on public blockchains operated by a global set of validators (e.g., on Ethereum or Solana).

• Validators = individuals, companies, and node operators worldwide
• Network access = open to anyone
• Rules and upgrades = governed by open-source communities

In this model, the economic value of the network is distributed across validators and the broader ecosystem, not concentrated in banks.

---

Conclusion: The true nature of the financial infrastructure war

What we are witnessing in today’s financial system is not just a race over technology. It is a structural battle over “who operates the network, and who captures control and economic benefits.”

• Tokenised deposits extend the existing banking system onto blockchains, allowing banks to preserve control and profit in a form of on-chain finance they prefer.
• Stablecoins attempt to route around the traditional system, building a new global digital dollar ecosystem on public blockchains.

The two models can coexist, but they will lead to very different futures. Right now, we are watching the moment when traditional finance tries to absorb blockchain and blockchain builders push to create an alternative financial order.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

If you would like to read this article in Korean, please click the button below.

Read This Article in Korean →