BlockBeats reported on Aug. 27 that the Federal Reserve Bank of Dallas published a report warning that if tokenized deposits gain broad adoption, they could increase the sensitivity of deposits to interest rates, accelerate the movement of funds across banks, and weaken banks’ liquidity and maturity transformation capacity, with knock-on effects for credit supply and funding costs.
Dallas Fed outlines risks tied to tokenized deposits
The report said tokenized deposits differ from stablecoins such as USDT and USDC because they are typically issued by regulated banks and can pay interest. The Dallas Fed said blockchain-based instant settlement, smart contracts, and agentic AI could make it easier for customers to shift funds quickly in pursuit of higher yields, reducing the stickiness of traditional bank deposits.
Estimates point to weaker bank risk-bearing capacity
According to the report, if deposit rate sensitivity rises by 10%, banks’ capacity to absorb interest-rate risk could fall by about $700 billion on a 10-year equivalent basis.
It also estimated that if the weighted average maturity of deposits shortens by 10%, the banking system’s maturity transformation capacity could decline by about $580 billion.
Banks may turn more to wholesale funding
The report said banks that want to preserve current loan volumes may need to rely more heavily on wholesale funding such as term debt. That could make bank lending funding models closer to those used by non-bank financial institutions and may push up borrowing costs for consumers and businesses.
Regulatory attention is increasing
The report added that multiple global banks have already started testing tokenized deposits and round-the-clock settlement systems, and the potential impact of tokenized deposits on the traditional banking system is drawing growing attention from regulators.