Regional Banks Launch Cari Network: Tokenized Deposits on ZKsync

Regional Banks Test Tokenized Deposits with Cari Network

A consortium of U.S. Regional banks, including Huntington Bancshares, First Horizon, M&T Bank, KeyCorp, and Old National Bancorp, are collaborating on a new network called Cari, designed to tokenize deposits and facilitate instant payments. The initiative aims to bring the speed and accessibility of stablecoins to traditional banking, while retaining the regulatory protections of FDIC insurance. The network is built on Prividium, a private blockchain developed by Matter Labs, and leverages ZKsync layer-2 technology, anchored to Ethereum.

The Promise of Instant Settlement

The core goal of Cari is to enable 24/7 instant payments between participating banks. Currently, moving money between banks can take time, even with systems like ACH. Tokenizing deposits allows for near-instantaneous transfer of value, potentially revolutionizing how regional and community banks operate. This is a significant shift as these lenders seek to remain competitive amidst growing competition from fintech companies and digital asset players. The network plans to launch a minimum viable product (MVP) in March 2026, with pilot testing scheduled for the third quarter and a full commercial rollout anticipated by the finish of the year, according to Ledger Insights.

How Cari Differs from Stablecoins

While Cari’s tokens will function similarly to stablecoins – offering fast and efficient transfers – a key distinction lies in their regulatory status. Unlike many stablecoins issued by non-bank entities, Cari’s tokens will represent actual bank deposits, meaning they are eligible for FDIC insurance up to the standard $250,000 limit per depositor. This addresses a major concern surrounding stablecoins, which have faced increased scrutiny from regulators regarding reserve backing and consumer protection. The tokens will mirror conventional banking liabilities, ensuring they remain on banks’ balance sheets and subject to existing regulations. This approach aims to provide the benefits of digital currencies without sacrificing the safety and security of the traditional banking system.

The Technology Behind the Network

The Cari Network is built on Prividium, a permissioned blockchain created by Matter Labs, the firm behind the ZKsync scaling solution for Ethereum. Phemex reports that Prividium is designed for regulated financial institutions, offering both speed and privacy while allowing for regulatory audits. The use of a permissioned blockchain means that only approved participants – in this case, banks – can access and use the network. This controlled access is crucial for maintaining compliance and security. ZKsync, a layer-2 network, helps to reduce transaction costs and increase throughput on the Ethereum blockchain.

Gene Ludwig’s Vision and the Mid-Size Bank Coalition

The Cari Network is spearheaded by Eugene Ludwig, a former Comptroller of the Currency during the Clinton administration. Ludwig also founded Promontory Financial Group, a regulatory consulting firm acquired by IBM in 2016. His extensive experience in banking and regulation lends credibility to the project. Ludwig believes that banks should be at the forefront of digital money innovation, stating, “Banks should be leading the next phase of digital money, not reacting to it,” as reported by Banking Exchange. The Mid-Size Bank Coalition of America has also voiced its support for the initiative, highlighting the interest of regional lenders in upgrading their payments infrastructure without risking deposit outflows to newer digital alternatives.

Financial Implications and Scale

The banks involved represent a significant portion of the regional banking landscape. Huntington Bancshares holds approximately $225 billion in assets, while First Horizon has $84 billion, M&T Bank $214 billion, KeyCorp $184 billion, and Old National Bank $72 billion. While the initial rollout will focus on transactions within the network, the consortium plans to eventually connect with other payment networks to broaden interoperability and extend instant settlement capabilities. The potential cost savings from reduced transaction times and improved efficiency could be substantial for these institutions. However, the initial investment in developing and implementing the Cari Network will require significant capital expenditure.

What’s Next for the Cari Network

The immediate next steps involve the launch of the MVP in March 2026, followed by rigorous testing and refinement during the pilot phase in the third quarter. Banks will be evaluating how these tokenized deposits are created, transferred, and converted back into traditional U.S. Dollars. Successful completion of the pilot will pave the way for a full commercial rollout by the end of the year. Further development will likely focus on expanding the network to include more banks and integrating with other payment systems. The consortium will also need to navigate the evolving regulatory landscape surrounding digital assets and ensure ongoing compliance.

Matter Labs CEO Alex Gluchowski emphasized the broader implications of the project, stating that financial infrastructure is undergoing a transformation similar to the shift from siloed databases to shared, programmable infrastructure. Prividium, he argues, allows banks to leverage blockchain technology while maintaining the privacy, compliance, and control required by regulated institutions.