European Banking Authority: 17% of EU banks plan to engage in tokenized deposits within the next two years

ChainCatcher news, the European Banking Authority (EBA) has released a report on tokenized deposits, stating that from a regulatory perspective, tokenized deposits are fundamentally the same as traditional deposits. The agency plans to analyze existing regulations to determine if they are adequate. It noted that, due to the limited activity in tokenized deposits so far, there is no urgency to take action. A survey conducted in March identified only two projects, but did not specify their names.

Analysis suggests that one of the projects should be the Commercial Bank of Germany's Currency Token (CBMT), as it mentioned five banks and five enterprises; the other could be Euroclear's D-FMI, as it is purely used for securities settlement and referenced the UTXO used by R3's Corda enterprise blockchain. According to the EBA's survey, 17% of EU banks plan to engage in tokenized deposits in the next two years.

The paper discusses the benefits of tokenized deposits, such as programmability, efficiency, and atomic settlement. It believes that most banks may adopt permissioned blockchains due to the need to identify customers, and the Basel Committee's crypto rules make it difficult for banks to use permissionless blockchains. However, the agency points out that blockchains face typical 51% attack risks and potential reliance on third parties, while programmability may introduce additional liquidity risks. Nonetheless, the report states that it is still too early to discuss the impact of tokenization on deposit stickiness.