Banks found a way to copy stablecoins without losing the money that funds their loans
Banks defend themselves against stablecoins by saying they are building tokenized deposits to modernize payments, with programmable money and around-the-clock settlement. Falcon Finance chief RWA officer Artem Tolkachev told CryptoSlate that the explanation covers only half the reason: “It is the balance sheet, not the technology.” A tokenized deposit keeps the money a stablecoin would move off a banks balance sheet, leaving it as a deposit the bank can still lend against. Tolkachev said: “A stablecoin competes with the deposit. A tokenized deposit is the deposit, just programmable.” Underneath stablecoins and tokenized deposits Tolkachev said that, to whoever is holding them, a tokenized deposit, a reserve-backed stablecoin, and an overcollateralized synthetic dollar look identical. In the case of a tokenized deposit, the $100 million sits on one banks balance sheet. The bank earns the return by lending it out, and the holder carries that banks credit risk, though the position still counts as an insured deposit. The FDICs position backs that reading, saying tokenization changes a deposits form while leaving its substance intact. In a reserve-backed stablecoin, the money moves into the issuers reserves, and the issuer earns the yield on those reserves. The holder carries the issuers operational and reserve risk with no claim on the upside, since