CRYPTO INSIGHT 01
If Bank Deposits Become Tokens, Do We Still Need Stablecoins?
How tokenised deposits are reshaping payments and settlement—and the conditions for stablecoins to remain relevant
Key Conclusion
TradeLens’s base case is coexistence and a division of roles between tokenised deposits and reserve-backed payment stablecoins, rather than wholesale replacement. Tokenised deposits have a strong substitution case in corporate treasury and bank-linked institutional settlement when counterparties are connected. Stablecoins retain utility across public wallets, exchanges and separate participant networks; their competitive edge increasingly rests on recipient reach, liquidity, reliable conversion into cash and persistent balances—not merely 24-hour transfer speed.
Research Summary
If bank deposits can move as tokens, what role remains for stablecoins? This report examines the question through live customer pilots in the UK, Project Agora’s real-value tests, HSBC’s Tokenised Deposit Service, and the separate experiences of Lloyds and SoFi. It distinguishes bank deposit liabilities from reserve-backed payment tokens: redemption responsibility, interest rights, protection and access conditions do not become identical simply because both use digital ledgers. Corporate funds awaiting payment are a plausible area of substitution, but a deposit is useful for settlement only if the recipient and the cash-out route are connected. An illustrative holding-period model shows how a yield advantage can be outweighed by conversion costs for short-lived balances; it is not a forecast of product returns. The analysis also separates token transfer from FX liquidity, legal settlement finality and usable bank cash, and distinguishes better won payment infrastructure from demand to hold dollars. Finally, it maps potential value capture across banks, issuers, wallet and payment platforms, connectivity providers and public-network tokens. Institutional adoption does not automatically create income rights or price gains for token holders. The central judgement is coexistence: stablecoins must demonstrate connectivity that bank deposits do not yet provide, while the decisive evidence will be repeat use, average balances, total costs and actual cash availability.
Key Points
- Tokenised deposits and stablecoins represent different claims, with distinct redemption, protection, interest and access conditions.
- Corporate treasury and institutional settlement offer a strong substitution case for tokenised deposits, conditional on counterparty reach and interoperability.
- Stablecoins retain utility across public wallets, exchanges and networks that do not share the same bank relationships; speed alone is not a durable advantage.
- Holding periods, conversion costs, FX liquidity and cash-out access matter: more payment volume need not produce proportionately larger reserve balances.
- Value capture depends on contracts, recurring use and customer relationships. Bank adoption of a platform does not automatically generate returns for its public-token holders.