After last year’s GENIUS Act gave stablecoins a green light, Eugene Ludwig met with bank CEOs to discuss a vision for the digital-asset future.
“Banks were initially intrigued by the idea of stablecoins,” which, in Ludwig’s view, “have their virtues. But we had concluded that tokenized deposits are a must-do.”
By September 2025, six banks – First Horizon Bank, Huntington Bank, KeyBank, M&T Bank, Old National Bank and SouthState Bank – were working as design partners of Cari Network “around a shared goal of enabling regional, mid-size and community banks to participate fully in the next generation of digital money infrastructure,” as was stated this September when those organizations participated in Cari’s initial, $32.5 million external funding round.
Eugene A. Ludwig
Ludwig, a former U.S. Comptroller of the Currency – the regulator of national banks – who went on to found consulting firm Promontory Financial Group (acquired by IBM) and the IntraFi reciprocal-deposit network, is Cari’s founder and CEO. He says 30 banks have joined Cari and another 50 are in active discussions, representing more than $10 trillion in combined assets.
“From day one, we’ve believed that banks should be at the center of how digital money evolves, not adapting to infrastructure built without their input or influence,” Ludwig said in the funding announcement, which revealed that Cari launched a minimum viable product (MVP) on March 31 and had a full product suite delivered on July 31. “The fact that our first outside capital comes entirely from banks speaks volumes about what we’ve accomplished together and the opportunity ahead.” He expects the design partners will be operating on the platform by year-end, able to offer insured deposits in tokenized form.
“We think this is a big plus; maybe fair to say it is transformational for banking,” Ludwig contends. While some see stablecoins as a disintermediation threat, “tokenizing deposits keeps them in the bank to use, supporting our communities.”
Other Collectives
Cari is not the only example of banks banding together on blockchain.
In June, The Clearing House, owned by 25 of the largest U.S. financial institutions, announced an on-chain money initiative to provide interbank clearing and settlement of tokenized deposits.
In August, 39 state bankers associations announced the BankChain Alliance (BCA), “an industry-owned, industry-designed and industry-governed network built on a common blockchain platform” and contemplating stablecoins, tokenized deposits and other innovations.
Stablecoins are the focus of a global group of 21 institutions – among them Bank of America, Citi, BBVA, Deutsche Bank and MUFG – aiming to have a “stablecoin solution” on the market in first half, 2027. They would be plunging into a sector dominated by Tether and Circle Internet Group.
Using the Swift network’s blockchain ledger, Standard Chartered and HSBC completed a cross-border transaction in August that Lewis Sun, HSBC’s head of digital currencies, called “a landmark moment for the promise of tokenized deposits. It demonstrates how digital money issued by banks can be interoperable across institutions while maintaining the integrity and regulatory oversight of the existing financial ecosystem.”
On November 2, Standard Chartered announced the launch in Hong Kong of its Tokenized Deposits solution, a corporate service that it plans to take into more markets over time. The bank contributed to the development of the Hong Kong Monetary Authority’s EnsembleTX infrastructure, gaining “firsthand experience of how tokenization can enhance efficiency, transparency and interoperability across financial markets,” said Mary Huen, Standard Chartered’s CEO, Hong Kong and Greater China & North Asia.
Banks and Crypto Together
In September, SoFi Bank, in a partnership with Mastercard, said it “is migrating its entire $25 billion card program to stablecoin settlement of transactions using SoFiUSD, the first stablecoin issued by a nationally chartered bank.” SoFi subsequently introduced SoFi Earn (SOFIE), “the first national bank-issued tokenized deposit for consumers,” with a stablecoin-convertibility feature.
Ripple in October received final charter approval for Ripple National Trust Bank, reinforcing the regulatory underpinning of the two-year-old, $2.5 billion-market-capitalization RLUSD stablecoin, which is issued by the New York State-chartered Standard Custody & Trust Co.
Ripple CEO Brad Garlinghouse said the new trust bank can show what crypto and banks working together “looks like in practice. We’ve spent over a decade building regulated financial infrastructure that institutions can actually use at scale.”
Brad Garlinghouse
According to Ripple’s announcement, “The national trust bank will be authorized to provide fiduciary digital-asset custody services, giving Ripple another federally supervised capability as enterprises increasingly integrate digital assets into existing payments, trading and treasury infrastructure. The approval comes as RLUSD continues to scale across institutional use cases.”
Nellie Liang, a former Federal Reserve and U.S. Treasury official who is now a Brookings Institution senior fellow, sees the networking and tokenized-deposit activities as indications of banks’ ability to adapt as payments and technologies evolve. The future may go in directions different from today’s stablecoins, and the banks have resources to compete and innovate, Liang said on October 29 during a panel discussion at an MIT Golub Center for Finance and Policy conference.
“Safety and Soundness”
Cari CEO Ludwig maintains that tokenized deposits are “particularly safe” because the network’s permissioned blockchain provides a fully auditable and immutable record. Smart contracts provide the additional benefit of programmability. A bank gets “speed and certainty internally in a way that’s never been available before. Done the right way, it increases their safety and soundness.”
Peter Marton
GENIUS Act regulations are still being worked out, and the follow-up CLARITY Act, despite heavy industry lobbying and bipartisan support, stalled in the U.S. Senate. Whereas “stablecoins introduce more friction for banks out of the gate,” says Cari chief risk and compliance officer Peter Marton, Cari has been able to work with its banks to ensure that tokenized deposits meet transaction monitoring, liquidity management and other requirements.
“There’s an advantage to being part of a bank-only network in terms of anti-money laundering (AML) and know your customer (KYC),” Ludwig said. “There are layers of protection that you don’t have in other industries, including other financial services providers.”
Ludwig added that Cari is exploring further uses of tokenized deposits, including transfers of securities, collateral mobility, connections to other interbank digital-asset networks, and interoperability with other private, tokenized deposit networks.
All Sizes Represented
Kathleen Kraninger, chair of the BankChain Alliance and president and CEO of the Florida Bankers Association, said she learned from experience as Consumer Financial Protection Bureau director, FDIC board member and fintech executive about the emergence of digital transaction rails. Discussions with her organization’s members and bank-association peers indicated that regional and community banks had limited options.
Kathleen Kraninger
The BCA is looking to deliver a system that operates as tokenized deposits “in network,” and as stablecoins when going outside the network. The alliance, now with 44 states and nearly 4,000 banks represented, is structured to give members direct ownership. It aims to have a full board in place early next year, representative of banks of all sizes. Rather than depending on third parties for the technology and platform operation, the BCA may acquire a stake in a technology partner.
“Programmability is an exciting element of blockchain from a productivity standpoint,” Kraninger said, pointing to back-end services such as escrow and letters-of-credit as candidates for automation.
Catherine Owen, chair of the American Bankers Association and executive chair of Eagle Bank & Trust Co. in Arkansas, said that she is encouraging banks to learn about tokenized deposits, and that the ABA is supportive. “I believe there will be opportunities like programmable payments that will transform the way banks move money,” Owen said.
Core banking systems vendor Jack Henry has a deposit tokenization offering reaching community banks and credit unions. It leverages Google Cloud Universal Ledger (GCUL), a managed service “that enables financial institutions to tokenize and transfer money and assets on a shared, real-time record with programmable, 24/7 settlement capabilities,” said an October announcement. Ben Metz, Jack Henry chief technology officer, said the “strategy is centered on helping financial institutions navigate emerging technologies and access innovative capabilities through trusted, scalable infrastructure.”
Comptroller of the Currency Jonathan Gould spoke about GENIUS Act implementation on October 27 to the Ohio Bankers League: “Community banks have a role in the future of payments. Under the final rule, there is a pathway for interested community banks to explore issuing payment stablecoins through a subsidiary. And the requirements are meant to fit the size and risk of the issuer, not to be a one-size-fits-all compliance burden that only the biggest institutions can afford.”
Jeffrey Kutler of GARP contributed reporting for this article.
Topics: Digital Assets, Innovation, Regulation & Compliance