A group of major U.S. regional banks is developing a blockchain-based payment system designed to modernize digital money movement while keeping funds inside the traditional banking system. The initiative, known as the Cari Network, aims to enable instant transfers of tokenized deposits using blockchain infrastructure, offering a regulated alternative to stablecoins. Backed by institutions including Huntington Bancshares, First Horizon, M&T Bank, KeyCorp, and Old National Bancorp, the project signals a growing push by banks to compete directly with crypto-native payment solutions.
The Cari Network will allow banks to convert customer deposits into digital tokens that can be transferred instantly between participating institutions. Unlike stablecoins issued by private companies, these tokenized deposits will remain on bank balance sheets and continue to be subject to existing regulatory frameworks, including deposit insurance protections. This distinction is central to the project’s positioning, as it combines the speed of blockchain with the trust and oversight of the traditional financial system.
Built on ZKsync’s layer-2 infrastructure, the network uses a private, permissioned blockchain environment known as “Prividium,” developed by Matter Labs. The system is designed to ensure both transaction efficiency and privacy, while still allowing regulators to monitor activity when required. Access to the network is restricted to approved participants, primarily regulated financial institutions, ensuring compliance with financial laws and reducing the risks often associated with open blockchain systems.
The initiative reflects increasing pressure on banks to adapt to the rise of digital assets and blockchain-based settlement systems. Stablecoins have gained traction due to their ability to facilitate near-instant, low-cost cross-border payments, often operating outside traditional banking rails. By developing tokenized deposit networks, banks aim to replicate these advantages while maintaining control over customer funds and adhering to regulatory standards.
Testing for the Cari Network is already underway, with participating banks exploring the issuance, transfer, and redemption of tokenized deposits. The project is targeting a full rollout in 2026, depending on regulatory approvals and successful pilot programs. If implemented at scale, the network could significantly reduce settlement times for interbank transactions, which currently rely on slower legacy systems.
Analysts see the move as part of a broader shift toward tokenization within the financial industry. By digitizing deposits, banks can streamline operations, reduce friction in payments, and potentially unlock new financial products built on programmable money. The integration of blockchain technology into core banking functions also positions institutions to compete more effectively with fintech companies and decentralized finance platforms.
At the same time, the development highlights a growing divide between regulated financial innovation and crypto-native systems. While stablecoins operate globally with fewer constraints, bank-issued tokenized deposits prioritize compliance, transparency, and systemic stability. This creates two parallel models for digital payments: one driven by open blockchain ecosystems and another anchored in traditional financial institutions.
Industry observers note that the success of tokenized deposit networks will depend on adoption among banks and businesses, as well as regulatory clarity. Governments and central banks are increasingly supportive of initiatives that modernize payment infrastructure without introducing systemic risks. Projects like the Cari Network align with this approach by offering blockchain efficiency within established legal frameworks.
The effort also underscores how competition in the payments sector is intensifying. As stablecoins gain momentum in cross-border trade and institutional finance, banks are accelerating their own digital transformation strategies. By leveraging blockchain technology, they aim to retain relevance in a rapidly evolving financial landscape where speed, cost, and accessibility are becoming decisive factors.
The Cari Network represents a significant step toward integrating blockchain into mainstream banking. If successful, it could redefine how deposits are used, transferred, and managed, bridging the gap between traditional finance and the emerging world of digital assets.
