Columbia Business professor casts doubt on tokenized bank deposits

Omid Malekan, an adjunct professor at Columbia Business School, contends that tokenized bank deposits—bank balances recorded on a blockchain—will ultimately lose out to stablecoins. He argues that stablecoin issuers, which maintain 1:1 cash reserves, are safer from a liability standpoint than fractional reserve banks issuing tokenized deposits. Furthermore, stablecoins are composable, allowing them to move across the crypto ecosystem, whereas tokenized deposits are permissioned, subject to KYC controls, and have restricted functionality, making them akin to a bank check usable only within that specific bank's network. Malekan states that tokenized deposits are useless for cross-border payments, serving the unbanked, or enabling composability and atomic swaps in decentralized finance (DeFi). He also notes that tokenized deposits must compete with yield-bearing stablecoins or those that pass on yield through customer rewards.

(Source：Cointelegraph)