Former US comptroller Gene Ludwig launches tokenized deposit network to compete with stablecoins

Gene Ludwig, the former US Comptroller of the Currency, has launched Cari Network to deploy a blockchain-based tokenized deposit system targeting US regional banks, partnering with Matter Labs to enable 24/7 transfers of customer deposits without removing funds from the banking system.

The move positions tokenized deposits as a direct response to stablecoin competition and regulatory uncertainty, as five major regional banks—including Huntington Bancshares, KeyCorp, and M&T Bank—test the infrastructure.

Announced Tuesday in a release shared, the Tokenized Deposit Network is positioned as a response to increasing competition from stablecoin issuers and ongoing regulatory discussions in Washington, including the proposed GENIUS Act.

The initiative reflects a broader shift as traditional financial institutions explore blockchain infrastructure to modernize payments and settlement systems.

Tokenized deposit network aims to modernize banking infrastructure

The Tokenized Deposit Network is designed to allow participating banks to tokenize existing customer deposits, enabling real-time transfers without removing funds from the regulated banking system.

Unlike public cryptocurrencies, these tokenized deposits remain within a permissioned network governed by bank compliance and risk management frameworks.

According to project stakeholders, this approach ensures that deposits continue to support lending activities while benefiting from the efficiency of blockchain-based settlement.

“Financial infrastructure is being redesigned in real time, and mid-sized banks are the ones being left behind,” — Alex Gluchowski, CEO, Matter Labs, in a statement to Cointelegraph.

Gluchowski added that the Tokenized Deposit Network provides an opportunity for smaller banks to “lead that transition, rather than be displaced by it,” emphasizing the urgency of adapting to digital payment innovations.

Regional banks collaborate on tokenized deposit network

Several US regional banks have already contributed to the design and testing of the Tokenized Deposit Network, including Huntington Bancshares, First Horizon, M&T Bank, KeyCorp, and Old National Bancorp, according to a report by Bloomberg.

The involvement of multiple institutions highlights growing interest among mid-sized lenders in adopting blockchain-based payment systems to remain competitive with larger banks and fintech platforms.

The broader model has also received support from the Mid-Size Bank Coalition of America, which argues that keeping deposits within regulated banks is critical for maintaining credit flows to small businesses and local economies.

“Keeping deposits within regulated institutions is essential to sustaining lending capacity and supporting economic activity,” — Mid-Size Bank Coalition of America, policy position.

By anchoring deposits within a controlled environment, the Tokenized Deposit Network seeks to balance innovation with financial stability.

Prividium infrastructure enables privacy and compliance

At the core of the Tokenized Deposit Network is Prividium, Matter Labs’ blockchain infrastructure designed to support privacy, control, and auditability.

Built on ZKsync and anchored to Ethereum, the system enables instant settlement between verified counterparties while maintaining strict data separation.

According to Matter Labs, transaction records are recorded on-chain, while sensitive customer information remains within each bank’s internal systems, ensuring compliance with regulatory requirements.

“The architecture was designed with US banking privacy and supervisory expectations in mind,” — Alex Gluchowski, CEO, Matter Labs.

This structure allows regulators and auditors to access transaction data without exposing personally identifiable information, addressing key concerns around data protection and compliance in blockchain-based systems.

The Tokenized Deposit Network also incorporates tamper-evident audit trails, which can enhance transparency and trust in financial transactions.

Tokenized deposits compete with stablecoins

The rise of the Tokenized Deposit Network comes as stablecoins continue to expand their role in payments and settlement.

While some banks have explored issuing stablecoins, proponents of tokenized deposits argue that they offer a more integrated solution within the existing banking system.

Gluchowski emphasized that tokenized deposits are not necessarily in direct competition with stablecoins but can serve complementary roles.

“Tokenized deposits are complementary to stablecoins,” he said, adding that banks can use them as “the payment tokens when money needs to move in and out” of private financial infrastructure.

As lawmakers debate regulatory frameworks such as the GENIUS Act, the Tokenized Deposit Network could influence how policymakers approach the intersection of traditional banking and digital assets.

Meanwhile, ZKsync’s strategic pivot toward institutional use cases reflects a broader industry trend, as blockchain developers focus on enterprise adoption following declining retail activity.

The launch of the Tokenized Deposit Network signals a critical moment for mid-sized banks seeking to remain relevant in an evolving financial landscape.

By combining blockchain efficiency with traditional banking safeguards, the initiative may redefine how deposits are managed, transferred, and integrated into the global financial system.