Mentioned in This Article
1. Tokenized deposits vs stablecoins: a banker's verdict
Alessandro Hatami, founder of Pacemakers and former chief operating officer of digital banking at Lloyds Banking Group, argued in a commentary published on November 10, 2026 that the debate over tokenized deposits vs stablecoins is turning in favor of banks. He expects stablecoins to survive, but in a narrower and more specialized role.
His case rests on a simple observation. Crypto companies are acquiring banking licenses while banks are putting deposits on blockchains, and the two camps are meeting in the middle. Once that happens, Hatami writes, it becomes reasonable to ask what durable advantage a stablecoin still holds over money issued by a regulated bank.
He frames the question through the eyes of a corporate treasurer, a person with little interest in ideology and a great deal of interest in outcomes. A treasurer wants to know three things: whether a payment arrives dependably, how much it costs to send, and what safeguards protect the balance. If an existing banking relationship can satisfy all three, Hatami sees little reason for a company to park funds with a separate stablecoin issuer.
From there he sets out four tests that he believes will settle the contest. The first is whether bank money can do what stablecoins already do. The second is whether banks can cooperate with one another. The third is who ends up keeping the interest earned on the underlying funds. The fourth concerns access and identity.
2. What is the difference between tokenized deposits and stablecoins?
A tokenized deposit is an ordinary bank deposit recorded on a blockchain, so it remains a claim on the bank that issued it, while a reserve-backed stablecoin is a token whose value depends on the reserves an issuer holds and the arrangements it offers for redemption. That distinction in legal character drives most of the practical differences Hatami discusses.
Because a tokenized deposit is still a deposit, it can carry the features that come with one. Hatami notes that an eligible bank deposit may earn interest and may be covered by deposit insurance, subject to the limits that apply. Placing it on a blockchain adds programmability: a payment can be set to execute automatically once conditions agreed in advance have been met.
A stablecoin holder stands in a different position. The holder relies on the issuer to keep adequate reserves behind the tokens in circulation and to honor redemptions. Stablecoins, the digital tokens designed to track a traditional asset such as the US dollar, have become one of the most widely used products in crypto precisely because they move easily between wallets, trading venues and applications. Hatami does not dispute that head start. His argument is that it may not last once banks offer comparable tools at scale.
3. Technology is no longer the dividing line
On pure capability, Hatami concludes that stablecoins hold no lasting edge. The functions that made them attractive, including settlement at any hour and payments that follow coded rules, are properties of the underlying ledgers and are available to any institution willing to build on them.
He cites a paper from consulting group Capgemini and blockchain company Quant, which argues that banks can provide transfers around the clock without having to rebuild their core systems. That matters because the cost and risk of replacing core banking technology has long been a reason lenders moved slowly.
He also points to JPMorgan, whose deposit token, JPM Coin, has launched on the Base network and is being extended to Ethereum (ETH). The bank continues to decide who is permitted to hold the token. Hatami treats that restriction as less of an obstacle than it might appear: for businesses that have already passed identity checks, a permissioned token is not a meaningful barrier to use.
4. Getting rival banks to accept each other's tokens
Coordination, in Hatami's telling, is where stablecoins still lead and where banks face their real examination. A stablecoin connects wallets, exchanges and applications across many markets at once. A token that works only inside a single bank offers far less, because most payments involve a counterparty that banks somewhere else.
Traditional banking solved this problem generations ago through clearing and settlement systems, and Hatami argues that tokenized deposits need the equivalent: common rules, systems that are compatible with one another, and settlement between banks in central bank money. Creating a token is the simple step. Persuading competing institutions to honor one another's obligations is the difficult one.
He offers three examples to show that this work has started. In the United Kingdom, seven banks taking part in the Great British Tokenized Deposit initiative have completed pilot transactions using tokenized sterling deposits, their first live payments of this kind. In Germany, the Commercial Bank Money Token initiative, known as CBMT, carried out its first live interbank payments in May. In the United States, The Clearing House is building a tokenized deposit network supported by 25 banks.
Hatami is candid about the limits. None of the three networks is yet linked to the others, which means a tokenized pound cannot simply flow into the German or American arrangement. Still, he reads the projects as evidence that cooperation among banks has moved out of the realm of theory and into practice.
5. Who keeps the interest
Yield is the third test, and it is the one most likely to register with anyone managing a large cash balance. Major stablecoin issuers earn income on the reserves that back their tokens. The people and companies holding those tokens generally receive none of it.
US law is about to harden that arrangement. The GENIUS Act, which takes effect in January, prohibits issuers from paying holders interest simply for holding a stablecoin. Hatami notes that rewards routed through partners such as exchanges sit in a gray area. Rules published in October by the Office of the Comptroller of the Currency, a US bank regulator, indicate that such arrangements will be assessed case by case.
Tokenized deposits are able to pay interest, though Hatami adds a caution: putting a current account on a blockchain does not make a bank generous. Whether depositors actually see a return depends on the bank's pricing, not on the technology.
Even so, he expects the comparison to be made. A business sitting on a sizable balance may reasonably ask why it should give up earnings if bank money delivers similar payment features. Some companies will decide that the reach and convenience of stablecoins justify the cost. Banks, he argues, will therefore have to compete on exactly those qualities.
6. Self-custody, DeFi and the identity problem
Access is the area where Hatami sees stablecoins retaining advantages that banks will struggle to reproduce. Holders can keep stablecoins in their own custody without an intermediary. The tokens plug directly into decentralized finance, and they sit in established pools of liquidity. For a large group of users, those attributes are the point.
He also highlights financial inclusion. For a person who cannot open a suitable dollar account, particularly in a country where inflation or mistrust of local banks makes saving difficult, a dollar-denominated stablecoin can be extremely valuable. A tokenized deposit, which presupposes a banking relationship, does not reach that person.
The same openness creates a difficulty. Transfers between private wallets appeal to those who want to hide who they are, and a public record of transactions does not necessarily disclose the parties behind them. Hatami observes that legitimate access and illicit use can depend on identical infrastructure.
That leads him to a trade-off. The more rigorously stablecoin holders are verified, the more closely access to stablecoins comes to resemble access to a bank. In his assessment, stablecoins keep a genuine role in this area, but a smaller one than their current footprint suggests.
7. Digital money is being absorbed, not replacing the system
Hatami's broader conclusion is that digital money appears headed for absorption into the regulated financial system instead of displacing it. He draws that reading from two directions at once: banks building shared token networks, and crypto firms seeking to become banks.
The crypto side of that convergence is visible at Kraken. Its parent company, Payward, has agreed to buy Saldo Bank, a digital bank licensed in Lithuania, in order to obtain a European banking license. The transaction requires regulatory approval and is expected to close in 2027. In March, Kraken Financial became the first digital asset bank to be granted a master account at the Federal Reserve.
For banks, Hatami sees clear competitive stakes. Lenders that join shared networks can hold on to deposits that might otherwise migrate to stablecoin issuers. Those that stay on the sidelines risk losing corporate clients to rivals whose tokens are more useful.
He does not predict that the stablecoin market will close. He predicts that it will narrow. If exchanges begin accepting tokenized deposits, traders and businesses that already have bank accounts would lose most of their reason to hold a token that pays no interest.
8. What happens next
Several dates and decisions will shape how the argument plays out. The GENIUS Act's ban on issuer-paid interest takes effect in January, and the Office of the Comptroller of the Currency's case-by-case approach to partner rewards will determine how much room remains for stablecoin holders to earn a return indirectly. Payward's purchase of Saldo Bank awaits regulatory approval ahead of an expected 2027 close.
On the regulatory front, Hatami describes the decision by BaFin, Germany's financial supervisor, that CBMT tokens are deposits as encouraging. The harder challenge, in his view, is coordinating across borders at the speed the market is moving, since the British, German and American networks remain separate.
His closing judgment is that stablecoins are likely to endure in a substantial but specialized role. Issuers have demonstrated that demand for digital dollars exists, and banks have started to coordinate in response. How much of that demand stablecoins retain will depend on whether banks finish building before stablecoin networks become entrenched, and on whether regulators clear the path for them to do so. The views are Hatami's own.