Ethereum Updates Today: Stablecoins Surpass Tokenized Deposits in the Digital Finance Battle

Omid Malekan, who teaches as an adjunct at Columbia Business School, has expressed doubts about the practicality of tokenized bank deposits, suggesting they do not offer the same adaptability or technological benefits as stablecoins, as reported by

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Malekan’s argument focuses on the fundamental distinctions between stablecoins and tokenized deposits. He claims that stablecoins backed by full reserves—where issuers hold cash or equivalents equal to the value of tokens—are more secure than tokenized deposits issued by banks operating on a fractional reserve basis. Additionally, stablecoins are highly composable, making them easy to use within decentralized applications (dApps) and for cross-chain transactions, whereas tokenized deposits are typically limited by Know-Your-Customer (KYC) requirements and have restricted use cases. “Tokenized deposits are comparable to a checking account that only allows you to send checks to other account holders at the same bank,” Malekan explained. “Such tokens are not suitable for most purposes.”

This discussion is becoming more pressing as the market for tokenized real-world assets (RWA) grows.

estimates that the value of RWAs—including tokenized stocks, property, and commodities—could jump from $35 billion now to $2 trillion by 2028. The expansion is largely powered by stablecoins, which provide liquidity and enable on-chain transactions. Geoffrey Kendrick, who leads digital assets research at Standard Chartered, pointed out that stablecoins have paved the way for the tokenization of traditional assets, with expected to take the lead due to its established reliability.

Nevertheless, tokenized deposits encounter further obstacles. Yield-generating stablecoins, which offer users returns, are emerging as a rival to conventional banking products. Malekan noted that stablecoin issuers can bypass restrictions on offering yields, giving them a competitive advantage in rewarding users. At the same time, the banking sector has pushed back against yield-bearing stablecoins, concerned that they could reduce banks’ market share and profits by diverting interest income.

The evolving regulatory and institutional environment adds more complexity.

has introduced a three-year plan to test asset tokenization, with an emphasis on practical uses such as supply chain finance and Islamic finance. , on the other hand, has already tokenized a private equity fund and intends to launch a more extensive investment fund tokenization platform by 2026. These initiatives highlight the increasing interest from major institutions in tokenization, though the lack of clear regulations remains a significant challenge.

Despite these hurdles, the RWA sector is experiencing rapid expansion.

that by 2028, both tokenized money-market funds and equities could each reach $750 billion, with further growth anticipated in commodities, real estate, and corporate bonds. The liquidity provided by stablecoins, which now surpasses $300 billion, is driving this momentum and fostering a “self-reinforcing cycle” of innovation. has also reported on recent developments, such as convenience stores in Hong Kong starting to accept digital yuan and asset tokenization companies preparing for public listings.

Malekan’s doubts highlight the ongoing friction between established financial systems and decentralized networks. While tokenized deposits may bring certain advantages, like greater transparency, their limited interoperability and regulatory hurdles make them less competitive than stablecoins. “Banks need to weigh these considerations carefully as they plan their digital finance strategies,” he concluded.