Five U.S. regional banks with $600 billion in combined deposits unveiled the Cari Network in March 2026, a shared blockchain platform that converts ordinary FDIC-insured deposits into programmable tokens capable of settling instantly between institutions. The consortium — Huntington Bancshares, F...
"Banks should be leading the next phase of digital money, not reacting to it." — Gene Ludwig, CEO, Cari Network
Five U.S. regional banks with $600 billion in combined deposits unveiled the Cari Network in March 2026, a shared blockchain platform that converts ordinary FDIC-insured deposits into programmable tokens capable of settling instantly between institutions. The consortium — Huntington Bancshares, First Horizon, M&T Bank, KeyCorp, and Old National Bancorp — built the system on ZKsync's Prividium, a permissioned Ethereum Layer 2, and is targeting Q4 2026 for full production availability.
The initiative represents the banking industry's first coordinated response to the $315 billion stablecoin market. Unlike stablecoins, which operate outside the deposit insurance framework, tokenized deposits remain on bank balance sheets and retain FDIC coverage. JPMorgan's Kinexys platform already processes over $2 billion daily in tokenized deposit transactions. Swift is building an EVM-compatible shared ledger for cross-border tokenized deposit payments across 200+ countries. A separate consortium — the Hazel Network — is extending the technology to 600+ community banks through Vantage Bank and Custodia.
The FDIC confirmed on April 7, 2026, that deposit insurance applies regardless of the technology used to record deposit liabilities. This regulatory clarity, combined with the GENIUS Act's explicit separation of stablecoins from deposit products, has established the legal foundation for banks to compete directly with Tether and Circle using their existing regulatory infrastructure.
Cari Network selected ZKsync's Prividium stack — a private, permissioned Layer 2 platform anchored to Ethereum for settlement integrity — as its base infrastructure. The system enables banks to issue, transfer, and redeem digital deposit tokens on shared rails while maintaining the compliance controls and privacy requirements of regulated institutions.
The founding consortium — Huntington Bancshares ($196B assets), First Horizon ($82B), M&T Bank ($211B), KeyCorp ($187B), and Old National Bancorp ($53B) — collectively holds $779 billion in assets. The $600 billion deposit figure refers to the combined deposit base eligible for tokenization.
Development milestones are structured in three phases:
Alex Gluchowski, CEO of Matter Labs (the firm behind ZKsync), described the choice of infrastructure: "Financial infrastructure is undergoing the same shift computing went through decades ago, from siloed databases to shared, programmable infrastructure. With Prividium, banks can issue and move deposits on blockchain infrastructure while preserving the privacy, compliance, and control required by regulated institutions."
The tokens are designed to function like stablecoins in terms of speed and programmability — instant settlement, 24/7 availability, conditional execution — while retaining the legal properties of traditional bank deposits: FDIC insurance, fractional reserve banking, and existing compliance frameworks.
JPMorgan's blockchain division Kinexys has already established a production-grade tokenized deposit system processing over $2 billion daily in transactions, with cumulative notional value exceeding $1.5 trillion. Across all Kinexys products, average daily transaction volume exceeds $7 billion.
In November 2025, JPMorgan launched JPM Coin (ticker: JPMD) — a USD-denominated deposit token — on Coinbase's Base network, an Ethereum Layer 2. Initial institutional clients included B2C2, Coinbase, and Mastercard, all of which completed test transactions enabling near-instant 24/7 settlement.
In January 2026, Digital Asset and Kinexys announced plans to deploy JPM Coin natively on the Canton Network, a privacy-enabled blockchain designed for synchronized financial markets. This multi-chain expansion — Base plus Canton — positions JPM Coin as a cross-platform institutional settlement instrument rather than a single-chain product.
The significance is structural: the largest U.S. bank by assets has moved a deposit token from an internal permissioned ledger to public blockchain infrastructure. This validates the thesis that regulated deposits and public blockchains are not inherently incompatible.
Swift, the messaging backbone connecting 11,000+ financial institutions across 200+ countries, has moved its tokenized deposit initiative from design phase to active construction. The minimum viable product is built on Hyperledger Besu, an EVM-compatible open-source framework, and is scheduled for live transactions in 2026.
The ledger introduces a shared digital orchestration layer that records and validates interbank payment commitments using tokenized deposits as the underlying representation of value. Key design features include:
The approach is incremental rather than replacement-oriented. Swift is not abandoning its existing infrastructure but layering blockchain-based deposit tokenization on top of it. This preserves the network effects of the existing system — the core moat that challengers like Ripple have failed to breach — while adding programmability and settlement speed.
The tokenized deposit push is not confined to money-center and regional banks. In February 2026, Vantage Bank Texas ($4.9 billion in assets) and Custodia Bank launched the Hazel Network, a consortium designed to give community banks and credit unions structured access to tokenized deposit infrastructure.
In April 2026, Participate — a loan participation platform — announced integration with the Hazel Network, providing access to a network of more than 600 banks. The collaboration enables the first on-chain loan participation payment using tokenized deposits, with Vantage Bank as reserve manager, Custodia as blockchain infrastructure provider, and Participate as the automation layer.
The Texas Bankers Association subsequently announced that its 600-member network would gain structured access to tokenized deposit technology through the Innovation Magnet program. Rich Perez, TBA's Vice President of Innovation, framed it directly: "The real question for your members is participation: being part of this infrastructure shift, or watching competitors define it."
The Hazel Network's economic model claims that joining the consortium is accretive for any bank that converts at least 10% of its wire transfer volume to tokenized deposits. The patent-protected framework is designed to preserve core deposits within the banking system rather than allowing them to migrate to non-bank stablecoin issuers.
Two regulatory developments provide the legal scaffolding for tokenized deposits.
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), enacted in July 2025, defines payment stablecoins as privately offered digital assets redeemable for USD at par value, backed 1:1 by segregated liquid reserve assets. The Act explicitly separates stablecoins from bank deposits, creating a two-track system: stablecoins regulated under new federal rules, deposits regulated under existing banking law.
The FDIC's April 7, 2026 proposed rulemaking provides direct regulatory clarity for tokenized deposits. The proposed rule states that "the application of deposit insurance to deposits does not depend upon the technology or recordkeeping used to record an IDI's deposit liabilities." A deposit tokenized on a blockchain remains a deposit under federal insurance rules.
The FDIC simultaneously clarified that deposits held as reserves backing payment stablecoins would not receive pass-through deposit insurance to stablecoin holders. This asymmetry — tokenized deposits carry FDIC insurance, stablecoins do not — creates a structural regulatory advantage for the banking system.
Comments on the proposed rule are due by June 9, 2026. The GENIUS Act's full effective date is either 18 months from enactment (January 2027) or 120 days after regulators finalize implementing rules, whichever is earlier.
According to a Brookings Institution analysis, the two instruments differ on multiple dimensions:
| Feature | Tokenized Deposits | Stablecoins | |---|---|---| | FDIC Insurance | Yes (up to $250,000) | No | | Balance Sheet | On issuing bank's books | Off-balance-sheet; issuer holds reserves | | Fungibility | Supported by deposit insurance and lender-of-last-resort access | Limited; USDC operates on 32 blockchains with incomplete interoperability | | Regulatory Framework | Existing banking law | New GENIUS Act framework | | Reserve Requirements | Fractional reserve (standard banking) | 1:1 backing with liquid assets | | Lender of Last Resort | Fed discount window access | None | | Market Size (Q1 2026) | Early stage; $2B+ daily (Kinexys) | $315 billion total supply |
The stablecoin market reached $315 billion in Q1 2026, with USDT at approximately $184 billion (down $3 billion quarter-over-quarter — its first quarterly decline since Q2 2022) and USDC at approximately $78 billion. USDT dominance slipped to 58% while USDC captured roughly 80% of organic institutional volume.
The tokenized deposit market is orders of magnitude smaller in aggregate supply but growing in institutional adoption. The competitive dynamic is not about market cap replacement; it is about which instrument institutional treasurers and payment processors adopt for settlement.
From a value distribution perspective, tokenized deposits and stablecoins channel economic flows through different structures.
Stablecoins create a parallel financial circuit: Tether and Circle earn yield on reserve assets (primarily U.S. Treasuries) while holders receive no interest — a model that extracts seigniorage from the user base. Tether reported over $13 billion in profits in 2024 alone, derived primarily from this yield spread.
Tokenized deposits keep value within the existing banking circuit. Banks earn revenue through fractional reserve lending, interchange and payment fees, and relationship-based pricing. The economic value stays within the regulated financial system — bank shareholders, depositors (via interest), and the FDIC insurance fund all participate in the value chain.
The critical question is whether tokenized deposits can match the permissionless composability that makes stablecoins useful in DeFi. By definition, a permissioned Layer 2 like Prividium restricts access to approved participants. This limits the addressable use case to interbank settlement, treasury management, and enterprise payments — precisely the market where JPMorgan's Kinexys has already demonstrated traction.
For retail and DeFi applications, stablecoins retain a structural advantage. For institutional settlement, tokenized deposits offer a regulatory moat that stablecoins cannot replicate.
The banking industry is mounting a coordinated response to the stablecoin market through tokenized deposits — bank deposits represented as blockchain tokens that retain FDIC insurance, fractional reserve mechanics, and existing regulatory protections. The initiative spans the industry from JPMorgan ($2B+ daily volume) through regional banks (Cari Network, $600B deposits) to community banks (Hazel Network, 600+ institutions) and international infrastructure (Swift, 200+ countries).
The regulatory asymmetry created by the GENIUS Act and the FDIC's April 2026 proposed rulemaking gives tokenized deposits a structural advantage for institutional use cases. However, the permissioned nature of these systems limits their addressable market to interbank and enterprise settlement. The stablecoin market — at $315 billion and growing — retains dominance in retail, DeFi, and cross-border remittance contexts where permissionless access matters.
The two instruments are more likely to coexist than compete head-to-head. Tokenized deposits serve the institutional settlement layer that banks already control. Stablecoins serve the open, programmable layer that banks cannot easily replicate within existing regulatory constraints. The question is not which wins — it is how large each segment becomes and where the boundary between them stabilizes.