In an interview with Crypto newsBernhard Blaha, co-founder of the Austrian Digital Asset Association (DAAA) and CEO of a decentralized organization (DGO) The SCE of the peoplediscussed the new type of digital coin: deposit coins.
He explained the main differences between deposit tokens and stablecoins, why he calls the former “hybrids” and why they cannot be compared to CBDCs – even if both are issued by banks.
Finally, Blaha discussed how major banks’ work on deposit tokens could lead more institutional investors to enter the crypto market, and subsequently boost consumer confidence.
This is what he had to say.
The role of retail investors in driving the market is often greater 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” currency, 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 end, we’re seeing quite a pick-up in the market,” Blaha told me. Crypto news.
Retail investors play an important 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 need to come together for “every day use of the technology, without people having to understand that technology.”
Only then will we see the mass adoption everyone is talking about, Blaha said.
Differences between Stablecoins and Deposit Tokens
Blaha wouldn’t 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 hard opinion about deposit coins. Because technically and legally speaking, Deposit Tokens are nothing but marketing talk. […] That is not technological progress.”
As crypto firms create stablecoins and central banks explore CBDCs, Blaha said, private banks decided to do “their own thing”: deposit tokens, a term largely coined by investment banks JPMorgan.
Blaha noted that stablecoins and deposit tokens are almost the same. That said, there are three differences to note.
The first is who issues 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, can provide a deposit guarantee, unlike stablecoins.
The third difference is in the regulations: to issue a deposit token 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 confidence
The significance of these new coins, Blaha argued, is in the interests of banks, as they still have consumer confidence.
“And whether they call it stable currencies or deposit tokens, that could bring back a lot of confidence in the crypto market,” which was lost after the Terra/LUNA to collapse.
JPMorgan and other major players working on deposit tokens do one more important thing: it enables hedge funds and institutional investors to enter the crypto market.
According to Blaha, JPMorgan’s entry into this market means they have noticed an increasing interest in this market from both retail and institutional investors.
So, despite their previous stance on digital coins, they now want “a piece of the pie”.
Only Gateway to Crypto
However, depositing tokens is unlikely to squeeze stablecoins out of the market, he added, as the latter still have “quite a lot of advantages” 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 be a gateway to cryptocurrencies.”
In the very near future, we will see “a big wave” of tokenized assets coming to various blockchains, bringing benefits in terms of settlements, transactions, fees and flexibility to institutional investors of all kinds, Blaha concluded.
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