Why Deutsche Bank is evaluating the potential of stablecoins and tokenized deposits

Based on public information, this issue summarizes Deutsche Bank's evaluation and practice of stablecoins and tokenized deposits for reference.

According to Bloomberg, Deutsche Bank is evaluating the application prospects of stablecoins and tokenized deposits. The bank is currently evaluating two specific directions: one is to issue its own stablecoins or join industry joint stablecoin projects, such as launching the euro stablecoin project AllUnity through its DWS Group, Galaxy Digital and Flow Traders. The second is to study the application of tokenized deposits in payment scenarios, aiming to optimize payment and settlement processes. The report pointed out that Deutsche Bank has already made arrangements in the field of digital assets, including investing in the blockchain cross-border payment platform Partior, and establishing a partnership with the Swiss blockchain company Taurus to carry out digital asset custody business for institutional clients.

1. Strategic Background

Deutsche Bank's AllUnity project represents a strategic entry of traditional financial institutions into the field of stablecoins. This fully collateralized euro stablecoin will operate under the supervision of the German Federal Financial Supervisory Authority (BaFin), with plans to launch a corporate entity in 2024 and an official launch expected between 2025 and 2026. The project aims to bridge traditional finance and digital assets, with a particular focus on automatic payment scenarios for IoT devices, enabling secure and continuous capital flows between machines.

In the field of tokenized deposits, although Deutsche Bank has not disclosed specific projects, industry practices have revealed its potential direction. Tokenized deposits are essentially blockchain-based expressions of bank deposits, such as JPMorgan Chase's JPM Coin for instant settlement between customers. Such products usually run on a permissioned blockchain and are fully backed by bank deposits, in stark contrast to the open architecture of stablecoins. The Hong Kong Monetary Authority's Ensemble project is a testament to this trend. Its wholesale central bank digital currency (wCBDC) sandbox specifically studies how tokenized deposits can optimize the settlement of real assets such as green bonds and electronic bills of lading.

Stablecoins’ Substitution Properties and Inclusive Financial Needs. Stablecoins were born because they can replace bank-related roles. When cryptocurrency exchanges cannot obtain banking services,stablecoins provide a solution for value transfer.Deutsche Bank’s AllUnity targets enterprise-level payment scenarios, especially the micropayment needs of IoT devices, which reflects the core advantage of stablecoins, that is, their holding-to-own feature makes value transfers unnecessary for bank account system support. For example, users in Nigeria and other countries use USDT for cross-border remittances, and the handling fee is reduced from 8-12% of traditional channels to less than 3%, and the funds are received in seconds. By 2025, more than 32 million independent addresses worldwide will use stablecoin transactions, of which the proportion of users in emerging markets will increase significantly, highlighting its inclusive financial value.

Tokenized deposits’ efficiency optimization attributes and institutional needs. Tokenized deposits are essentially an enhancement tool for the banking system rather than a substitute.It serves existing bank customers and eliminates intermediate clearing links through blockchain technology. When a tokenized deposit is transferred between customers, the bank’s back-end will automatically adjust the balance of the relevant fiat currency account to ensure that the account is consistent with the actual situation. This mechanism is particularly suitable for large transactions of institutional users. According to public information, Brazilian companies use tokenized deposits for cross-border payments, and large transactions exceeding US$1 million will increase by 29% in 2023. The practice of the Hong Kong Monetary Authority has gone a step further and explored how tokenized deposits can be combined with wCBDC to achieve real-time delivery versus payment (DvP) for assets such as bonds and carbon credits, compressing the traditional T+2 settlement cycle to minutes.

III. Service Supervision

Open Ecosystem and Regulatory Challenges of Stablecoins. Deutsche Bank's AllUnity plans to issue on public permissionless blockchains (such as Ethereum and Layer2 networks) and support DeFi application integration. This openness makes it subject to strict regulatory scrutiny. The European Crypto-Asset Market Regulation (MiCA) requires that stablecoin issuers hold equivalent liquid assets and must be trust institutions or licensed electronic money institutions. The US GENIUS Act further stipulates that reserve assets must be short-term US Treasury bonds and repurchase agreements.

The core contradiction of regulation lies in the identification of the "currency attributes" of stablecoins: although they meet the functions of currency such as transaction medium and value storage, they may be identified as securities due to their lack of "singleness" (such as 1 US dollar stablecoin is not always equal to 1 US dollar). This uncertainty directly affects the business model - for example, Tether's holding of US$98.5 billion in US Treasury bonds has made it an important holder of US Treasury bonds, but if it is identified as a security, its operating costs will rise sharply.

The closed scenario of tokenized deposits continues with bank supervision. Tokenized deposits continue the regulatory framework of commercial banks, and their essence is the digital representation of deposits. If Deutsche Bank launches such products, it will continue to use its existing banking license and be subject to the Basel Accord Liquidity Coverage Ratio (LCR) and deposit insurance system. The Hong Kong Monetary Authority's sandbox experiment shows a typical scenario: tokenized deposits are only available to whitelisted users on a permissioned chain, and banks must ensure that each token corresponds to an equal amount of deposits. Although this closed nature limits innovation, it avoids the risk of "securities identification."

But for now, technical failures in tokenized deposits may cause misalignment between tokens and deposit balances, and tokenized deposits are not yet covered by deposit insurance. With the increase in programmability (such as automatic dividends), its "monetary purity" may become blurred and trigger a reassessment of regulation.

Fourth, Market Return

StablecoinCompetition has become increasingly fierce. As of 2025, USDT (US$146 billion) and USDC (US$56 billion) still dominate the market, but their share is being eroded by some new stablecoins. Deutsche Bank's euro stablecoin faces two challenges: first, the first-mover advantage of the US dollar stablecoin (accounting for 99% of the market share); second, the return innovation of decentralized stablecoins - such as USDe hedging the return of pledged ETH derivatives through Delta, providing an annualized return of 5-8%. Traditional institutions need to explore differentiated return strategies: AllUnity may combine DWS's asset management capabilities to invest part of its reserves in money market funds, but it must operate within the scope of regulatory approval.

The returns from tokenized depositsfocus on efficiency improvements rather than direct investment returns. JPMorgan Chase has reduced cross-border settlement time from days to minutes through JPM Coin, reducing liquidity costs. Hong Kong's green bond tokenization pilot has proved that automation of related operations can reduce settlement failure rates by about 30%. If Deutsche Bank promotes such business, the income will mainly come from transaction fees paid by institutional clients and fund deposit spreads, but the cost of technology investment needs to be balanced. At present, the scale of this field is limited, with a total amount of tokenized bonds of approximately US$12.8 billion, far lower than the stablecoin market.

V. Interactive Integration

Regulatory standardization and technological integration. 2025 will be a regulatory watershed: the passage of the US GENIUS Act will set a bottom line requirement of 1:1 short-term US Treasury reserves for stablecoins; the implementation of MiCA in the eurozone will promote the increase in the share of non-US dollar stablecoins. Deutsche Bank's AllUnity needs to adapt to this trend, and its euro stablecoin may adopt a hybrid architecture - issued on the public chain but managed by compliance layers such as Fireblocks. Tokenized deposit standards will also be unified: the Bank for International Settlements (BIS) is taking the lead in formulating the wCBDC and tokenized deposit interoperability agreement, and the experience of the Hong Kong Ensemble project may become a global template.

Functional complementarity and ecological synergy. The boundary between stablecoins and tokenized deposits will gradually blur. First, stablecoins will penetrate from retail investors to institutional investors. For example, BlackRock's BUIDL fund (US$2 billion) embeds U.S. Treasury yields into tokens to provide institutions with on-chain cash management tools. Deutsche Bank can learn from this model and upgrade AllUnity to an "interest-bearing stablecoin"; second, tokenized deposits will gradually become more open. For example, banks will allow non-customers to hold tokens under certain conditions in the future, and may achieve compliant cross-chain transfers through zero-knowledge proofs; third, infrastructure will gradually merge. For example, banks are expected to build a unified entrance in the future - corporate customers complete large-scale settlements through tokenized deposits, and small and medium-sized enterprises in the supply chain receive payments through stablecoins, and the two are automatically exchanged on the chain.

As the blood vessel of open finance, stablecoins continue to penetrate emerging markets and long-tail users; tokenized deposits become the engine of institutional efficiency, reshaping the settlement logic of the capital market. The two are gradually integrated in the central bank's regulatory sandbox and cross-chain protocols, and ultimately give birth to a layered and interoperable currency ecosystem.