Deutsche Bank AG is actively investigating stubcoins and various forms of tokenized deposits to gain confidence in key financial institutions to expand their presence within the digital asset space.
Sabi Behazad, head of digital assets and currency transformation at Deutsche Bank, explained in an interview that banks are considering a variety of strategies, including issuing their own tokens and working together on industry-wide initiatives.
He added that the bank is also assessing whether to develop its own tokenized deposit solutions for payments.
EU-wide standards already exist, Congress has passed steady-state laws, and global banks are considering ways these tokens and blockchain technologies can improve productivity. Although some of these projects took years to gain traction, many people are not divided into mainstream real-world scales.
Behzad said that in the US, we can certainly see the momentum of Stablecoins along with the regulatory support environment. He noted that banks have a variety of options to engage in the stubcoin industry. This can range from acting as a reserve manager to issuing your own Stablecoin either alone or as a consortium.
Both Stablecoins (digital tokens pinned in currencies such as the dollar or euro) and tokenized deposits represent money on the blockchain designed to make payments faster and more cost-effective.
Tokenized deposits are usually digital tokens issued by regulated banks, representing claims regarding bank deposits and essentially reflecting blockchain bank account balances.
European banks and major players are driving innovation and adoption of stubcoin
According to Bloomberg News, Banco Santander SA is reportedly in the early stages of its plan to launch Stablecoin and provide cryptocurrency access to retail clients via digital banks.
DWS Group, the asset management division of Deutsche Bank, has collaborated with Dutch Market Maker Flow Traders Ltd. and Crypto Fund Manager Galaxy Digital Holdings Ltd. to create euro-denominated tokens.
“I think there will be a collaboration role to develop European stubcoins and European banks, especially for reconciliation in the digital economy,” said Steven van Rijswijk, CEO of Groep NV, in a recent interview. However, he said there is no official plan for the Amsterdam-based lender to announce now.
Early client recruitment is emerging in payments. JPMorgan Chase & Co. reports that Kinexys’ network is processing more than $2 billion on average after a 10-fold increase in volume last year. However, this still makes a near-minimum percentage of JPMorgan’s daily payment processing to around $10 trillion.
Last year, Deutsche Bank strategically invested in Partior, a blockchain-based, cross-border payment and settlement company. The Frankfurt-based bank is also involved in Project Agorá, an initiative led by the International Bank of Reconciliation and various central banks. In 2023, Deutsche Bank partnered with Swiss Blockchain Firm Taurus to develop a digital asset custody service for institutional clients.
Big Tech accelerates the adoption of digital tokens
The growing momentum of US stubcoin regulations has reportedly encouraged major tech companies to explore digital token integration. The “Guide and Established Stablecoins Act of the US National Innovation” or the Genius Act are key developments that encourage businesses to dig deeper into their digital assets.
The bill seeks to provide a regulatory framework for domestic Stablecoins and their publishers, but has come across discussion about Big Tech’s potential participation in the Crypto industry.
Republican Sen. Josh Hawley recently said he will vote against the bill in its current form to allow tech companies to issue digital currencies that compete with the dollar, according to the New York Times.
In response, Democrats are reportedly planning to introduce amendments that ban large tech companies from creating their own stubcoins, according to sources cited by the NYT.
This change requires high-tech companies operating in the US to rely on existing Stablecoin publishers, such as tethers and circles.
Cryptopolitan Academy: Coming Soon – A new way to earn passive income with Defi in 2025. For more information
