By: Lewis Sun, Global Head of Digital Currencies, Corporate and Institutional Banking, HSBC.

For years, the debate around digital currencies has centred on which model – be it crypto, stablecoins, tokenised deposits, or CBDCs – will “win”. Unfortunately, that framing misses the point.

Digital money is not any one single thing. It is a set of instruments that each serves a different purpose, relies on different governance models, and bears a number of different characteristics. The focus, therefore, should be on what sits behind the value.

The questions that matter for real-world adoption, and that might determine whether any form of digital money can scale within regulated payment flows, are whose liability it is, what the redemption claim looks like, and what governance and controls sit behind it all.

Historically, many digital currencies were viewed, despite growing experimentation by market participants, as sitting outside the realm of mainstream finance. Renewed interest, driven by Bitcoin’s price rally and growing stablecoin adoption in recent years, has contributed to increased attention on the convergence of crypto and fiat payment rails with mainstream financial services. It also accelerated tokenisation across real-world and traditional financial assets. 

The transformative advantages introduced by tokenisation have attracted strong interest from traditional payments players, including central banks, payment infrastructures, and commercial banks, as they explore alternatives aligned to business needs and risk appetite. The proliferation of various forms of digital currencies has created not just opportunities, but in many cases, new challenges or even confusion. 

A growing part of the debate, however, is shifting from ‘if’ to ‘how’ digital money will play a role in financial systems, including which forms will matter, where they will be used, and how they will be governed. However, as is often the case, the real story lies beneath the market hype, as digital and tokenised forms of money are being explored for broader use in certain contexts.

Beyond speed: The understated benefits of digital money

When discussing the appeal of digital currencies, it is easy to default to the many speed and cost benefits that they bring. The ability to send cross-border payments in real-time, 24/7, can enable near real-time settlement in some corridors and networks, potentially with lower fees depending on the model and required controls. This is a considerable leap from legacy systems that can be slower and batch‑processed, which may increase time and cost in some cases.

But to view this solely as a technological upgrade is to miss the much bigger picture. Wallets, real-time payment schemes and ISO 20022 adoption have improved speed, transparency and data quality in many markets across the traditional payment space. The all-in cost of using digital money, once it is integrated with the end-to-end flow and overlaid with screening, reporting, dispute handling, and other compliance requirements, can look very different from the on‑chain “gas fee” alone.

One potential area of transformation is the embedded intelligence and resilience that these new forms of money offer. Through smart contracts, for example, payments can become programmable, and, depending on the legal structure and governance, DLT-based settlement may offer clearer finality and improved reconciliation.

The continuum of value: Understanding the substance

As the market matures, a plethora of terms, including CBDC, stablecoins, and tokenised deposits, have entered the lexicon. However, digital money isn’t one thing – it’s a range of instruments with different risk, legal, and operating characteristics. The most useful way to cut through these is to ask three important questions. First, whose liability is it? Then, what’s the redemption claim? And finally, what governance sits behind the rails? Those answers – not the technology itself – will determine whether an instrument can scale in regulated, high-value payment flows.

From that lens, it is clearer to see how these categories are much more about finding something that is fit-for-purpose. CBDCs, being central bank liabilities, can support low-credit-risk settlement in specific designs, particularly in wholesale contexts. Tokenised deposits extend commercial bank money into tokenised environments, which can be attractive for corporates because they preserve familiar cash-management constructs while enabling programmability and always-on settlement. Stablecoins can offer new distribution models and faster settlement in certain networks, but their suitability for institutional use hinges on reserve quality, governance, and the strength of regulated on/off ramps. Cryptocurrencies remain significant as digital assets and catalysts of innovation, but their volatility and lack of an issuer claim can limit their role in certain mainstream payment use cases.

What will matter

The common narrative of which digital currency will win is a distraction when what really matters is whether a given form of digital money is fit for purpose. Determining this involves assessing the liability and legal claim behind it (and therefore the level of trust and redemption certainty), the strength of governance and rulebooks for handling exceptions, disputes, and controls, and whether compliance can be embedded end-to-end at scale across KYC/AML.

Adoption will also hinge on interoperability -so value can move across platforms, institutions, and existing payment rails without trapping liquidity – alongside clear settlement finality and resilience for 24/7 operation.

Finally, the economics will be judged on total cost once integration, monitoring, investigations, and customer support are included – not just the on-chain fee – because that’s what determines whether digital money works in real corporate and institutional use cases such as cross-border B2B payments, always-on treasury movements, and tokenised asset settlement. The ultimate goal is a harmonious system where these currencies coexist, each with its own optimal purpose.

The new frontier: Preparing for the AI economy

Currently, most discussions focus on how digital currencies can solve existing payment challenges. But the horizon holds a far more demanding customer: the machine. AI may enable more autonomous software agents in some commercial settings. Some use cases may indeed benefit from payment infrastructure that supports high-frequency, low-value transactions to transact with each other settling token consumption at high frequency and high velocity, with minimal friction.

Examples are already arising, such as pay-per-use access to data and compute, automated settlement for tokenised assets, and machine-to-machine payments across supply chains and connected devices. Traditional finance can meet many of these needs, but some legacy payment and settlement rails weren’t built for high‑volume machine‑to‑machine transactions that run 24/7, execute automatically via APIs, and require near‑real‑time reconciliation and settlement at scale.

Today, we may see a clearer distinction between “traditional” and “emerging” payments. Over time, that distinction is likely to blur as underlying technology becomes more ubiquitous. The differentiator will be whether governance, interoperability, compliance controls, and resilience are strong enough to support automation safely, at scale, and across borders.