Tether CEO Says Stablecoins Are Safer Than Tokenized Deposits as Reserve Assets Differ

Paolo Ardoino, Tether's chief executive officer, said stablecoins have stronger reserve backing than tokenized bank deposits and could spur shifts in capital flows across financial markets.

In a post on X on Aug. 30, Ardoino wrote that stablecoins are 100% backed by liquid assets such as U.S. Treasuries, while tokenized bank deposits, like traditional bank deposits, keep only part of their funds in liquid assets.

He argued that this is also why the Bank for International Settlements is concerned about the spread of stablecoins, saying they expose the fractional-reserve structure of the existing banking system. "If stablecoins are fully backed by reserves, why should people keep their savings in products that are only partially reserved?" Ardoino wrote.

He added that if people conclude stablecoins are safer and begin shifting their savings into better assets, the financial system could face broad changes. "We are now entering the stage where we are starting to see that outcome," he wrote.