Episode Details

What is the difference between a tokenized deposit and stablecoin? Tokenized deposits are issued by a bank, denominated in fiat, backed 1:1 by funds on the bank’s balance sheet, and accessible only to customers who have completed standard KYC onboarding. Tokenized deposits operate on a permissioned network where participation is controlled and restricted to known parties. Stablecoin are digital tokens pegged to a currency and issued by a non-bank entity. Stablecoins like USDC or USDT are backed by reserves such as Treasury bills or cash equivalents. These reserves do not sit on the bank’s balance sheet. They are not treated as insured deposits. Stablecoins operate on a public blockchain network accessible to anyone with a digital wallet. What are major differences for bankers to understand? Two instruments, two different structures, each functions differently in practice, and each has regulatory differences.  This episode reviews a blog post from PCBB titled “Tokenized Deposits Vs. Stablecoins: Know the difference.” A link to the blog post is included below.  

Link: Tokenized Deposits Vs. Stablecoins: Know the Difference