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Panelists warn tokenized deposits raise unresolved liability questions; stablecoins need clearer rules
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Summary
Industry and bank panelists told a Federal Reserve audience that stablecoins and tokenized bank deposits serve different uses but regulatory uncertainty—especially liability on public chains—limits tokenized deposits’ participation in DeFi.
Stablecoins and tokenized deposits both aim to represent fiat value on ledgers, but panelists told a Federal Reserve audience Wednesday that they play different roles and face different constraints.
Moderator Rebecca Redig said total value locked in DeFi remains a small share of the crypto market, and that stablecoins are a critical on‑chain liquidity tool. "There has been a lot of talk over the years about whether this new intermediary‑less system can or will disrupt TradFi," she said, putting the discussion in context.
Jennifer Barker of BNY described tokenized deposits as "cash in the bank"—digital representations of deposits that remain within a bank’s custody and offer liquidity optimization within the bank’s walls. By contrast, she said, stablecoins function as cash outside banks and can traverse multiple chains and systems.
Michael Shalov, CEO of Fireblocks, warned tokenized deposit projects on public blockchains face unresolved questions about bank liability when deposits move from first parties to third parties. "On public blockchains, it's actually unclear what happens when it goes from first party to third party and what is the liability of a bank," he said, and added that regulatory uncertainty—not technology—is the main reason many bank tokenization projects stalled.
Sergei (Chainlink) and other panelists urged improved transparency (proofs of reserves and proof of liabilities) and risk frameworks so markets can price and compare tokenized deposits and stablecoins. Panelists also noted successful tokenized deposit projects on private ledgers (for example, JPMorgan’s internal projects) and said public‑chain deployments raise distinct compliance questions.
Panelists recommended that regulators clarify risks and redemption standards for stablecoins and tokenized deposits and that the Fed consider making existing infrastructure compatible with tokenized payments and settlements to support market growth.
