SoFi’s tokenized deposits put banks in competition with stablecoins, Truth Ventures CEO says

SoFi Technologies’ move to offer interest-bearing tokenized deposits could signal growing competition between banks and stablecoin providers, according to Varun Datta, founder and CEO of Truth Ventures. The product, called SoFi Earn (SOFIE), lets consumers earn 4.40% APY on digital dollars while keeping the funds available for crypto purchases and blockchain-based transfers. The deposits carry FDIC insurance up to applicable limits and can be converted into SoFiUSD at a 1:1 ratio. Datta said banks can compete with stablecoin issuers through interest, deposit protection and existing customer relationships, although consumers must understand which protections apply to each product. “The problem is that the customer needs to understand what happens when they go from a bank deposit to a stablecoin,” Datta told Crypto Briefing. “They need to understand where the interest applies, where the deposit protection applies etc.” “For payments adoption, yield on its own is not sufficient. You need lower costs, reliable transfers and somewhere practical to spend the funds. I don’t think that simply holding your funds to earn interest between trades quite equates to payments adoption,” he added. ...