🎙️ Ep. 60. Stablecoins vs. Tokenized Deposits — What Do Banks Want?

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This week's Tokenized features Rachel Mayer, VP of Product at Circle where she focuses on Arc (Circle's programmable blockchain), and Nick van Eck, CEO and Co-Founder of Agora, joining hosts Simon Taylor (Head of Market Dev at Tempo) and Cuy Sheffield (Head of Crypto at Visa).

The discussion covers BlackRock's tokenization thesis, European bank consortium stablecoins, tokenized deposits vs. stablecoins, regulatory divergence between MiCA and the GENIUS Act, corporate stablecoin strategies and the emergence of stablecoin-linked card programs.

 🎙️Listen to the full episode here on your favorite podcast app or 📷 watch on YouTube.

Key Takeaways

BlackRock's Public Conviction Signals a Mainstream Inflection Point

Larry Fink and Rob Goldstein's op-ed in The Economist comparing tokenization to the internet circa 1996 drew significant attention from this week's panel, not for its novelty, but for what it represents institutionally.

As Rachel Mayer from Circle observed: "When I read this piece, I just wanted to acknowledge the very public pivot that Fink and Jamie Dimon have done... It's them admitting that they were once wrong and now that their position is that net new value is coming onchain is a mainstream position."

Cuy Sheffield added important context related to this: "Larry Fink went as far as to say that Bitcoin is an index of money laundering and thieves. And so he wasn't even just mildly skeptical. He was actively thought that Bitcoin is worthless. And so it's always really interesting, and I have a lot of respect for people who can go and say I was wrong."

The numbers underscore BlackRock's conviction: with Bitcoin ETFs becoming one of the company's most profitable revenue sources and the most successful ETF launch of all time, crypto has moved from innovation theater to bottom-line driver.

Instant Finality and Collateral Mobility Remain the Core Value Propositions

Nick van Eck (Agora) framed the opportunity in practical terms: "I spent my whole career before starting Agora investing in enterprise software and enterprise software infrastructure. That transformation has been ongoing for 20-30 years. We had a shift to cloud from on-prem software and human-driven workflows. And I think it's going to take certainly as long when it comes to tokenization."

The panel identified instant settlement as the foundational unlock. Van Eck offered a relatable anecdote: "A number of years ago, I had assets in my Fidelity account. It was Tax Day in April... Between when I made that sale on Fidelity and that cash actually hitting my account is three days. And so you basically remove that window, not just for personal financial sales, but also corporate cash management movement."

Rachel Mayer highlighted three specific barriers institutions face in adoption:

• Gas token friction: Corporate treasurers must hold and account for volatile native tokens on balance sheets when the end use case is dollar-denominated investment

• Finality definitions: Layer 2s create complexity that confuses traditional finance decision-makers

• Privacy requirements: Tokenized financial instruments require confidentiality that public blockchains don't natively provide

European Bank Consortium vs. Single-Issuer Strategies Present Different Trade-Offs

The announcement of Qivalis - a Euro stablecoin venture backed by ING, BNP Paribas, UniCredit, and others - prompted discussion of consortium dynamics.

Cuy Sheffield noted the structural tension: "Consortiums are hard to build. It's hard to move quickly. It's hard to figure out the governance. You have many different people around the table who oftentimes are competitors, and they have very different interests."

He contrasted this with banks like BBVA taking a single-issuer approach: "They're saying, let's issue a stablecoin... not having to wait for a consortium, and being able to get live and experiment in their own use cases, I think makes a lot of sense."

Nick van Eck highlighted a more fundamental challenge for issuers seeking transatlantic reach: MiCA and the GENIUS Act have incompatible requirements. "In Europe, you are not allowed to have fees on redemptions, whereas in GENIUS you can... In MiCA you have to keep them in European bank deposits, where in the US they have to be in highly liquid government securities."

His conclusion: "I think it's going to come down to the fact you're going to have two different tokens for each region."

Rachel Mayer offered perspective on the Euro market's relative size: "Dollar denominated stablecoins are still 99% of the market... because the number one use case is you want to hold dollars across the world." She predicted emerging market non-dollar stablecoins may gain traction faster than the Euro: "That's where the margins are the widest in FX. That's where the correspondent banking rails are the weakest."

Tokenized Deposits vs. Stablecoins: The Open Loop Advantage

The episode addressed a recurring debate within bank strategy: whether to pursue tokenized deposits or stablecoins for onchain settlement.

Rachel Mayer made the case for stablecoins on safety grounds: "I think stablecoins is the way to go. Obviously it's safer, government obligation, narrow bank money... true government backed money and not fractional reserves." She added that tokenized deposits don't provide "the alternate benefit... from safety and standards policies, but also the open web3 and DeFi innovation ecosystem."

Simon Taylor articulated the structural limitation that may ultimately settle the debate: "A deposit, by its very nature, is a liability of that bank. It can't go outside of that bank, so you have to figure out a way to swap that tokenized deposit for another tokenized deposit." He noted that banks are exploring interoperability solutions through Swift and Partior, "but stablecoins are open loop by default, and they're cash-like, so they have this instant settlement property that makes them really unique."

The FDIC's proposed GENIUS Act implementation framework adds regulatory clarity to this distinction. As Taylor noted: "Tokenized deposits were not covered in GENIUS, and they're saying tokenized deposits, or deposits, would be covered by the FDIC, but also they're giving real clarity to how the backing collateral for a bank stablecoin and how FDIC insurance applies to that."

For banks weighing both options, the takeaway is clear: tokenized deposits serve internal and bilateral use cases well, but stablecoins offer the interoperability and global reach that open-loop settlement demands.

Corporate Stablecoin Issuance May Peak Quickly

Sony Bank's planned dollar-pegged stablecoin for games and anime payments sparked debate about the sustainability of the corporate stablecoin trend.

Nick van Eck offered a contrarian view: "I actually think corporates launching their own stablecoin will become a lot less popular very soon, because there's so much added friction... that asset is now there forever, you have to figure out different on and off ramps."

His prediction: "There's going to be a power law with five to 10 extremely large stables, and a bunch of custom ones."

However, Sheffield sees Sony as a distinctive case: "They are a bank in Japan that is very successful... If you want to scale a successful bank in Japan to the rest of the world, how you do that in a traditional pre-stablecoin universe is going market by market, getting full licensing... Now you could imagine a future where there could be a Sony wallet running on a Sony L2 with a Sony stablecoin that could look and feel like what Sony Bank is in Japan, but be embedded inside PlayStation and be available globally."

Stablecoin-Linked Cards Are Table Stakes for Wallets

Zepz (parent of WorldRemit and Sendwave) Visa card launch, powered by Bridge, illustrated the convergence of remittance and stablecoin rails.

Cuy framed the opportunity: "Most of the leading remittance companies have leaned into the space and have said, we're going to use stablecoins to create global wallets, and we're going to go from just playing one role in remittances to offering a global stablecoin neobank."

On cards specifically: "Stablecoin-linked cards are table stakes... if anyone is going to have a wallet that they want to drive mainstream adoption, how do you convince someone to be comfortable putting funds into that wallet? They have to know there's a way that's easy to get it out."

Rachel Mayer pushed for what comes next: "Everyone has a debit card. That's not real innovation anymore... What I would want to see from these new fintechs is credit - true credit, not just debit and spending on a wallet. Stablecoins are becoming store of value, unit of account for hundreds of millions of people. The next question is, what is the credit card layer on top of that?"

Looking Ahead: The panel expects FDIC guidance on bank stablecoin subsidiaries under the GENIUS Act to provide another structural unlock, while PSD3 may offer Europe a second chance at stablecoin-friendly payments regulation by 2027-28. The talent migration toward stablecoin companies - as Simon Taylor observed, citing a tweet from Nik Milanović (This Week in Fintech) that "all the smartest people" are joining stablecoin companies - may continue to slow institutional adoption timelines as banks lose crypto-native expertise to startups.

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