PANews reported on November 2nd that, according to Cointelegraph, banks and financial institutions have begun experimenting with tokenized bank deposits, which involves recording bank balances on the blockchain. Omid Malekan, an adjunct professor at Columbia Business School, believes that tokenized bank deposits lack the flexibility and technical features of stablecoins, making them a disadvantageous product, and that this technology is destined to be replaced by stablecoins.

Omid Malekan stated that issuers of overcollateralized stablecoins must maintain a 1:1 reserve of cash or short-term cash equivalents to back their tokens, making them safer from a liability perspective than fractional-reserve banks that issue tokenized bank deposits.

Furthermore, stablecoins are composable, meaning they can be transferred within the crypto ecosystem and used in a variety of applications, while tokenized deposits require permission, are subject to customer identity verification (KYC) controls, and have limited functionality.