Stablecoins’ head start is real. But if banks make tokenized deposits widely available and interoperable, the biggest competitive threat to stablecoins may turn out to be the banks catching up. Four issues will decide whether that happens: whether bank money can match what stablecoins do, whether banks can work together, who keeps the interest, and the harder questions of access and identity.
The technology isn’t exclusive to stablecoins
Start with the technology. A tokenized deposit is a bank deposit recorded on a blockchain: still a claim on the bank, but able to support the same kind of programmable payments as a stablecoin, executing automatically once agreed conditions are met.
A reserve-backed stablecoin works differently. Its holder relies on the issuer’s reserves and redemption arrangements, while an eligible bank deposit can earn interest and benefit from deposit insurance within the applicable limits.
A paper by Capgemini and Quant says banks can offer round-the-clock transfers without rebuilding their core systems.
Nor does bank money have to stay on a closed network. JPM Coin, JPMorgan’s deposit token, has launched on Base and is expanding to Ethereum, though the bank still decides who can hold it. For businesses that have passed identity checks, that need not be an obstacle. On capability alone, stablecoins have no lasting edge.