Stablecoins Get the Headlines. Tokenized Deposits Get the Job Done.

By Petter Sandgren, CEO at Centiglobe The U.S. Genius Act has brought stablecoins to the forefront, igniting a debate that reaches far beyond technology. Industry leaders, policymakers, and financial institutions are now weighing in on how tokenized money could reshape global payments and market dynamics. 

While blockchain and stablecoins represent important innovations, the debate often overlooks the practical realities of stablecoin payments: the costs, the risks, and the operational complexities. Just as importantly, the conversation frequently ignores tokenized deposits, an approach that leverages the benefits of blockchain while avoiding many of the drawbacks associated with stablecoins, mainly risks and costs.

The Risks Related to Stablecoins

The risks of stablecoins are increasingly acknowledged. As privately issued instruments, their resilience is tied to the financial health of the issuing entity. Any disruption at the issuer level at e.g., Tether could ripple through the stablecoin market and into the broader dollar ecosystem. Regulation helps mitigate these risks, but reliance on private issuers remains an unstable foundation for critical financial infrastructure.

The Real Cost Behind Every Stablecoin Transfer

Less discussed are the hidden costs. To use stablecoins, fiat currency must be converted into tokens and later exchanged back. These “on-ramp” and “off-ramp” processes introduce friction and expense. Compliance obligations such as KYC and AML, combined with Foreign Exchange charges on cross-border transfers, further add to the total cost. In many cases, these expenses approach the same levels as traditional remittance services. As long as fiat currencies remain the dominant store of value and medium of exchange in the world, these on-ramp/off-ramp costs will remain.

The Better Model: Tokenized Deposits on Permissioned Networks

A stronger alternative exists today: tokenized deposits on permissioned networks. Unlike stablecoins, tokenized deposits are simply existing bank funds represented digitally and transferred via distributed ledger technology. This model preserves the trust and oversight of regulated banking contrary to the uncertainty of privately issued stablecoins. As the tokens represent a bank deposit, something well known and tangible, it integrates easier with existing systems, and is painless for risk, compliance, and accounting teams to manage. 

Just as importantly, tokenized deposits are more likely to gain traction with local regulators. This is particularly relevant in emerging markets, where many central banks view stablecoins with caution due to risks of capital flight and the potential circumvention of capital controls. Tokenized deposits, by contrast, are more likely to align with regulatory priorities, making them a credible foundation for sustainable growth in global payments.

Compared to stablecoins, tokenized deposits deliver lower costs, stronger compliance alignment, and a readiness for real-world adoption today. For banks and payment providers, they represent the most effective way to combine the reliability of traditional finance with the efficiency of modern DLT infrastructure.

A Modern Infrastructure That Fits Today’s Financial Framework

Centiglobe Connect offers a credible alternative to stablecoins by operating with tokenized deposits, ensuring institutional-grade trust and alignment with regulatory frameworks. The platform enables banks and payment providers to move value instantly across borders through tokenized deposits. 

With one API, members gain direct access to a global marketplace of peers, eliminating intermediaries and scattered pre-funding. The result is predictable, traceable, and cost-efficient cross-border payments that free up capital, reduce operational complexity, and open new revenue opportunities – all while operating within existing regulatory frameworks.

While stablecoins spark debate, tokenized deposits, enabled through Centiglobe Connect, provide the practical, regulatory-aligned infrastructure for instant, predictable, and capital-efficient cross-border payments.