Private blockchains, rather than public networks, could become the primary infrastructure for tokenized assets, according to analysts at JPMorgan. In their view, banks will build tokenization infrastructure within regulated environments, while public blockchains will continue to play a supporting role.
JPMorgan believes banks are unlikely to move core tokenization processes onto public blockchains. Instead, asset issuance, custody, and settlement are expected to remain within private infrastructure, while public networks will mainly be used to distribute assets and enable interoperability between different blockchains.
According to JPMorgan, the shift of tokenization, payments, and settlements to private networks could reduce activity and liquidity across the public crypto ecosystem, limiting capital inflows. Analysts believe that, over time, this could also put pressure on Bitcoin.
The analysts also suggest that tokenized bank deposits could partially replace stablecoins in institutional settlements. Public blockchains may also face growing competition from central bank digital currencies and other solutions developed by the traditional financial sector.
JPMorgan also outlines an alternative scenario. If public and private blockchains end up serving different functions, while regulation accelerates stablecoin adoption, public networks could play a more significant role. At the same time, the analysts believe Bitcoin can maintain its status as digital gold regardless of the role public blockchains play in the global financial infrastructure.