Banks Seek to Manage Digital Currency Infrastructure Themselves: 39 State Associations Plan Network
Thirty-nine state banking associations in the U.S. are planning to establish a common digital transaction infrastructure through which banks can manage digital currency and new payment transactions under their own control. This blockchain network, called the BankChain Alliance, is intended to be used for digital currencies pegged to assets like the dollar (stablecoins), digital representations of bank money on the blockchain (tokenized deposits), and payment transactions that can operate automatically under specific conditions (smart payments).
This move highlights the banking sector’s plan to consolidate ownership and management of digital currency and payment infrastructure within their own institutions. To this end, 39 state banking associations have joined the joint venture called the BankChain Alliance. The project represents thousands of banks.
According to the announcement, the planned network will be designed based on banks’ own needs and will likewise be managed by the sector. However, there is no functioning system in place yet. The associations are still looking for a technology partner to develop the network and aim to launch the project next year. This date has not been announced as a definitive launch schedule.
Which transactions is the BankChain Alliance targeting?
The project’s targeted use cases focus on allowing banks to offer digital financial products and new payment tools. These include stablecoins, which are digital currencies pegged to an asset like the dollar, tokenized deposits, which are digital equivalents of bank funds on a blockchain, and smart payments, which can operate automatically under certain conditions.
The project is also planned to be interoperable. This means that BankChain will be able to exchange data and transactions with other blockchain networks in the future; no integration has taken place yet.
Kathy Kraninger, an executive at the Florida Bankers Association, is serving as the interim president of the initiative. Kraninger stated that they aim for the network to provide secure and regulatory-compliant digital financial tools to banks of various sizes.
Interest from banks in this area has increased recently. Last month, Swift announced that 17 banks, including Citi, BNY, and Wells Fargo, would test tokenized asset transactions. In April, banking groups attempted to slow the implementation of regulations stemming from the GENIUS Act, which regulates stablecoin issuers.