A report from the Federal Reserve Bank of Dallas said tokenized deposits may weaken the stickiness of bank deposits even as they enable real-time settlement. The bank estimated that if deposit sensitivity to interest rates rises by 10%, banks’ capacity to bear interest-rate risk could fall by about $700 billion. The report drew a distinction between tokenized deposits and stablecoins such as USDT, saying tokenized deposits are regulated and can pay interest. At the same time, instant settlement could make it easier for depositors to move funds in search of higher yields. The report also noted that Custodia, Vantage, Barclays, and BMO have recently launched pilot programs tied to tokenized deposits or around-the-clock settlement, according to Decrypt.
The Federal Reserve Bank of Dallas said in a report that tokenized deposits, while supportive of real-time settlement, may reduce the stickiness of bank deposits.
The institution estimated that if deposit sensitivity to interest rates increases by 10%, banks’ capacity to bear interest-rate risk could decline by about $700 billion.
How tokenized deposits differ from stablecoins
The report said tokenized deposits differ from stablecoins such as USDT in that they are regulated and can pay interest. Still, instant settlement could speed up depositors’ shift toward higher-yield options.
Pilot programs already underway
Custodia, Vantage, Barclays, and BMO have recently launched pilot programs involving tokenized deposits or 24/7 settlement.
The item cited Decrypt as the source.
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