Stablecoins Outshine Tokenized Bank Deposits, Says Expert
- Omid Malekan, a professor at Columbia Business School, claims tokenized bank deposits will struggle against stablecoins.
- Overcollateralized stablecoin issuers maintain a safer liability structure with a required cash reserve of 1:1.
- Tokenized deposits lack composability and are limited to KYC controls, unlike DeFi applications.
- The tokenized real-world asset sector could reach $2 trillion by the year-end of the projected period.
- Current average yields on savings accounts in the US and UK are under 1%, making higher yields from stablecoins appealing.
Tokenized bank deposits face challenges due to their restricted functionality and inability to serve broader financial needs like cross-border payments or decentralized finance (DeFi). The banking lobby’s resistance to yield-bearing stablecoins highlights ongoing tensions between traditional banks and emerging crypto solutions.
Malekan’s insights suggest that as stablecoins continue to grow in popularity, their advantages over tokenized deposits may further solidify their position in the market. (Source)
