Banks May Become the Biggest Competitors to Stablecoins as Tokenized Deposits Expand

An analysis suggests that traditional banks could become the biggest competitors to stablecoins. As banks expand blockchain-based tokenized deposits, they may replace the payment functions of stablecoins. However, it is expected that stablecoins will maintain their competitiveness in decentralized finance and financial accessibility. Kraken's parent company, Payward, has agreed to acquire Saldobank, which holds a banking license in Lithuania, with the transaction expected to be completed next year after regulatory approval. In the UK, seven banks have completed real payment tests of tokenized pound deposits, and Germany's commercial bank currency token project also finished its first real transaction between banks in May. In the US, a joint tokenized deposit network involving 25 banks is being established. JP Morgan's deposit token, JPM Coin, has been launched on Base and is expanding to Ethereum. Hatami mentioned interoperability as a strength of stablecoins, connecting exchanges, wallets, and applications. He explained that for bank tokenized deposits to gain competitiveness, interbank common rules and compatible systems are necessary. Interest payments are also a key variable, as the Genius Act, effective in January next year, prohibits stablecoin issuers from paying interest to simple holders. In contrast, tokenized deposits can pay interest. Hatami analyzed that as the business areas of banks and digital asset companies converge, the market for stablecoins may shrink.

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