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Banks argue tokenized deposits can mimic stablecoin functionality
The approach keeps funds on a bank’s balance sheet, so holders carry the bank’s credit risk while the position still counts as an insured deposit, unlike some stablecoin models.
CryptoSlate reports that banks defending tokenized deposits to manage stablecoin-related competition say the key difference is where the money sits. Under the tokenized deposit model, a reserve-backed stablecoin and a synthetic dollar can look similar to holders, but the underlying risk allocation and balance sheet treatment differ.
The piece explains that tokenized deposits function like deposits that are programmable, rather than money that leaves the bank and moves into an issuer’s reserves. It describes how a deposit token can remain on the issuing bank’s balance sheet, settle at par, and fall within the same supervisory and deposit-insurance framework as other deposits, with holders carrying the bank’s credit risk.
CryptoSlate also contrasts other stablecoin structures, saying reserve-backed stablecoins typically move funds into issuer reserves with deposit insurance not positioned behind holders in the same way, and synthetic dollars rely on overcollateralization held separately from the issuer. It notes that a Dallas Fed statement in July characterized deposit tokens as commercial-bank deposits that remain under existing supervision.
Finally, the article says Falcon Finance chief RWA officer Artem Tolkachev argued that if stablecoins pull funding from banks, the first visible impact would be higher bank funding costs, showing up before deposit outflows become apparent, and it includes reference to FDIC views on how tokenization changes form without changing deposit substance.