Banks' Stablecoin Defence Bites Back
Dallas Fed research warned that tokenised deposits — bank deposits issued on blockchain rails, the industry's structural alternative to stablecoins — could drain up to roughly $700 billion from bank lending capacity by making deposits faster to move, per Decrypt. Separately, coverage reported major banks including Bank of America, Wells Fargo and Santander weighing a jointly issued stablecoin targeted for 2027, and the BankChain Alliance's planned shared network now carries a 2027 launch target.
Tokenised Deposits: the banks are eating their own funding
Banks are building tokenised deposits (regular bank deposits put on a blockchain) specifically to avoid the trap of stablecoins draining the money that funds their loans. But the Dallas Fed just told them the new thing bites too.
Right now your money is lazy. Moving it to a bank paying better interest takes days of friction. Instant blockchain settlement kills that friction. So deposits stop being sticky and start chasing the best rate every second.
Dallas Fed researchers modelled that a 10% speed-up in deposits chasing yield could cut the banking system's capacity to make long-term loans by roughly $700 billion.
That's the whole business model. Banks borrow short and lend long. Speed up the short end and the long end wobbles. There may be no version of this that's safe for the thing banks actually do.
4 sources
- Banks found a way to copy stablecoins without losing the money that funds their loans · cryptoslate.com · T2
- 39 State Banking Groups Form BankChain Alliance for 2027 Blockchain Launch · thedefiant.io · T2
- Tokenized Deposits Could Drain $700 Billion From Bank Lending, Dallas Fed Warns · decrypt.co · T1
- US Banks Join Forces to Build a Blockchain of Their Own · decrypt.co · T1