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What Bank-Issued Stablecoins Mean for Crypto: Insights from The People’s SCE CEO Bernard Blaha

Sead Fadilpašić
Last updated: | 3 min read
Bernhard Blaha. Source: eCredits / YouTube

In an interview with Cryptonews, Bernhard Blaha, co-founder of the Austrian Digital Asset Association (DAAA) and CEO of decentrally governed organization (DGO) The People’s SCE, discussed the new type of digital coin: deposit tokens. 

He explained the key differences between deposit tokens and stablecoins, why he calls the former ‘hybrids’, and why they can’t be compared to CBDCs – even if both are issued by banks.

Finally, Blaha discussed how big banks’ work on deposit tokens could result in more institutional investors entering the crypto market, and subsequently in the increase in consumer trust. 

This is what he had to say.

Retail Investors’ Role in Driving the Market is Often Bigger Than That of Institutional Investors

Deposit tokens are essentially the same as stablecoins, only issued by private banks. That said, the crypto market is likely to benefit from this “marketing-lingo” coin, Blaha said.

He argued that market activity does not always correspond to price or market capitalization increases.

That said, in terms of interests, “at least on our side, we’re seeing quite a pickup in marketplace,” Blaha told Cryptonews.

Retail investors play a significant role in driving the market, often more so than institutional investors.

Importantly, however, all the different categories in the industry – the deposit tokens, stablecoins, central bank digital currencies (CBDCs), non-fungible tokens (NFTs), tokenized assets, etc – are puzzle pieces that have to come together for “everyday usage of the technology, without people having to understand that technology.”

Only then will we see the mass adoption that everybody’s talking about, Blaha said.

Differences Between Stablecoins and Deposit Tokens

Blaha would not compare deposit tokens to CBDCs which are a much broader area. Rather, he calls them “a hybrid” – a stable currency issued by a bank.

He stated that,

“I have a very harsh opinion on deposit tokens. Because technically, and legally speaking, deposit tokens are nothing but marketing lingo. […] That is not technological advancement.”

As crypto companies are creating stablecoins, and central banks are looking into CBDCs, Blaha said, private banks decided to do “their own thing”: deposit tokens, a term largely coined by investment bank JPMorgan.

Blaha noted that stablecoins and deposit tokens are nearly the same. That said, there are three differences to note.

The first is who is issuing each: deposit tokens are issued by banks. Different types of companies can issue stablecoins.

The second is that deposit tokens, precisely because they are issued by banks, may offer a deposit guarantee, unlike stablecoins.

The third difference is on the regulatory side: for a deposit token to be issued in the EU, the issuer must have a banking license, while a stablecoin issuer must be regulated under the new Markets in Crypto-Assets (MiCA) law.

Return of the Trust

The significance of these new coins, Blaha argued, lies in the importance of banks, as they still hold consumers’ trust.

“And whether they call it stable currencies or deposit tokens, that might bring back a lot of trust to the crypto market,” which was lost following the Terra/LUNA collapse.

JPMorgan and other big players working on deposit tokens does one more major thing: it enables hedge funds and institutional investors to enter the crypto market.

In Blaha’s opinion, JPMorgan entering this sphere signifies that they have noticed increasing interest in this market, both from retail and institutional investors.

So, despite their previous stance on digital coins, they now “want a piece of the cake.”

Only Entrance Gate to Crypto

Deposit tokens are unlikely to squeeze stablecoins out of the market though, he added, as the latter still hold “quite a lot of benefits over” the former. One is that deposit tokens require a bank account.

Instead, it is likely that stablecoins, CBDCs, and deposit tokens will coexist, each with a specific use case.

Speaking of which, these three, Blaha opined, “will only ever be an entrance gate to cryptocurrencies.”

In the very near future, we will see “a big wave” of tokenized assets coming to a variety of blockchains, bringing advantages in terms of settlements, transactions, fees, and flexibility to all kinds of institutional investors, Blaha concluded.


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