Banks Duplicate Effort as Interoperability Remains Elusive

Major banks are racing to build their own blockchain networks, yet interoperability remains an issue. According to Wesley Rios, US and LATAM Partnerships Lead at Morph, this duplication of effort is unnecessary because the necessary infrastructure already exists.

The Clearing House's on-chain tokenized deposit network initiative, which 17 major banks committed to in June, aims to connect on-chain activity with traditional payment systems. However, a tokenized deposit represents a claim on the bank that issued it, redeemable only among the bank's own clients within its own system.

Rios argues that if every bank builds its own closed network, we will end up recreating the same fragmentation we already have today. He points out that Morph Payments, launched by Morph earlier this month, is a non-custodial platform that lets businesses settle stablecoin payments directly into their own wallets, providing portability and bank-agnostic rails.

Rios notes that tokenized deposits are a natural extension for existing bank customers, while stablecoins tend to win where portability matters most. He predicts that the two will coexist in the future, with the customer not knowing or caring whether a payment originated as a bank deposit, tokenized deposit, or stablecoin.