Banks have been pitching tokenized deposits as a way to modernize payments, enable programmable money, and support 24/7 settlement. Artem Tolkachev, Falcon Finance’s head of real-world assets, told CryptoSlate that this only tells part of the story. The real issue, he said, is the balance sheet.
“The key is the balance sheet, not the technology itself.” In Tolkachev’s view, tokenized deposits help banks keep funds that would otherwise move off bank balance sheets through stablecoins. The money remains a deposit, and banks can keep lending against it.
He put the distinction plainly: “Stablecoins compete with deposits; tokenized deposits are deposits, just with programmable features.”
Similar on the surface, different in who bears the risk
Tolkachev said tokenized deposits, reserve-backed stablecoins, and overcollateralized synthetic dollars can look almost identical from a holder’s perspective. The risk structure is not the same.
In a tokenized deposit setup, $100 million stays on a bank’s balance sheet. The bank earns income by lending it out. The holder bears the bank’s credit risk, but the asset still counts as an insured deposit.
The Federal Deposit Insurance Corporation has taken a similar position: tokenization changes the form of a deposit, not its underlying nature.
Reserve-backed stablecoins work differently. Funds move into the issuer’s reserve pool, and the issuer collects the income generated by those reserves. Holders take on the issuer’s operational risk and reserve risk, but they do not receive that income. The article notes that the GENIUS Act bars issuers from distributing reserve yield to holders, and these assets do not come with deposit insurance protection.
In overcollateralized synthetic dollars, the token is backed by collateral worth more than face value, with the collateral held separately from the issuer. Returns depend on how that collateral is managed. Holder protection comes from the overcollateralization ratio and from the segregation between custodian and issuer.
Tolkachev’s bottom line is that equal face value does not mean equal risk. What matters is where the money is held and who has the right to use it.
The fight for funding starts before deposits visibly leave
A July view from the Federal Reserve Bank of Dallas said deposit tokens are still commercial bank deposits. They remain on the issuing bank’s balance sheet, are redeemable at par, and fall under the same regulatory framework as ordinary deposits.
The FDIC’s April proposal drew another line. When deposits serve as stablecoin reserves, the insured party is the stablecoin issuer as the corporate depositor, not the retail stablecoin holder. Ordinary holders do not have a pass-through insurance claim, meaning they cannot bypass the issuer and seek compensation directly from the deposit insurer. The proposal says deposit insurance rules should stay the same regardless of the technology used to record the liability.
Tolkachev argued that if stablecoins trigger deposit outflows from banks, the first effect may be higher funding costs rather than an immediately visible drop in deposit volumes. Once banks lose low-cost, stable deposit funding, they may have to rely on more expensive wholesale funding to maintain lending. Profit margins could narrow before loan books actually contract.
He added that this transmission mechanism remains more of a theoretical debate than an empirically settled fact. Existing research supports the logic, but real-world case studies are still limited.
According to the article, the Federal Reserve and the Bank for International Settlements have reached similar conclusions: stablecoin-driven deposit migration can raise funding costs and eventually lead to loan repricing. “This fight is over the cheapest liabilities in the financial system, and the direction of credit costs will depend on who wins it,” Tolkachev said.
Banks are already launching products
Wells Fargo said in early August that it plans to roll out a tokenized deposit product for corporate and commercial clients this fall. The initial use case is U.S. dollar-to-pound sterling transactions, with broader expansion planned for 2027. The bank said the product will carry the same regulatory protections as existing deposit products and will also qualify for deposit insurance.
JPMorgan is already running its JPM Coin deposit token on Base. Institutional clients can move funds and post collateral on a public blockchain network, while the underlying funds remain commercial bank deposits.
The next few years will be a balance-sheet contest
Tolkachev said stablecoins remain a better fit for funds that need 24/7 cross-border movement, on-chain settlement, and instant transfers between counterparties. Bank deposits, by contrast, fit more static balances, backed by deposit insurance, lending relationships, and the bank balance sheet.
“Most corporate treasurers will use both tools and choose based on the use case.”
He also warned that bank deposits come with institutional risk assessment and regulatory oversight of reserves. Stablecoins can move dollars efficiently, but they do not come with the same risk-control and supervisory structure. In his view, that is also one reason transfers can be faster. Treasurers attracted by potential returns should first check the collateral behind the product.
In an optimistic scenario, large banks build interoperable tokenized deposit networks. Corporate treasury balances stay inside the banking system, while programmable settlement runs around the clock without moving the underlying money out of bank funding pools. Under that outcome, tokenized deposits become banks’ main answer to stablecoins, matching much of the functionality while preserving the deposit base that supports lending.
The downside case is also laid out. Even if just 1% to 3% of U.S. commercial bank deposits were to leave, that would equal roughly $195 billion to $586 billion based on the current $19.5 trillion deposit base. The pace of migration into stablecoins could exceed the capacity of tokenized deposits to absorb it.
That would mean higher funding costs, tighter profit margins, and loan repricing. In that framing, stablecoins are no longer just payment tools. They become a direct threat to the liability side of bank balance sheets.
The article’s conclusion is simple: banks are moving into tokenized deposits because stablecoins have already shown there is customer demand for programmable dollars. The real contest is over who controls money while it is in transit.
