On March 17, five US regional banks announced the launch of the Cari network, a tokenized deposit platform built on Prividium infrastructure utilizing ZKsync. The initiative aims to offer the speed and programmability of stablecoin payments while ensuring customer funds remain within the regulated banking system.
Builders and Their Rationale
The five banks participating in the Cari network are Huntington Bancshares (with $225 billion in assets), M&T Bank ($214 billion), KeyCorp ($184 billion), First Horizon Bank ($84 billion), and Old National Bank ($72 billion). While not the largest banks in the US, they represent a significant portion of the regional banking sector, an area most concerned about the risks posed if stablecoins capture a substantial share of daily payments and commercial settlements.
Ludwig's explanation of the project is straightforward. The goal is to enhance the regulated banking system, not to replace it. This framing reflects a specific competitive anxiety. Stablecoins like USDC and PayPal USD are demonstrably faster than traditional bank transfers for many use cases. If businesses and consumers shift to stablecoins for payments, the deposits currently held in regional bank accounts will follow, weakening the deposit base that supports lending capacity. The Cari network is both a defensive and offensive strategy.
Key Technological Distinctions
It is crucial to understand the structural differences between the Cari network and stablecoins, distinctions that are not superficial. Stablecoins like USDC are liabilities of their issuers, relying on reserves held outside the banking system. They lack FDIC insurance and do not support credit creation. When a dollar moves into USDC, it exits the fractional reserve banking system entirely.
Cari tokens, however, are different. They represent standard bank deposit liabilities. The underlying funds remain on the participating banks' balance sheets, continue to be FDIC-insured, and support lending through the fractional reserve mechanism. Customers holding Cari tokens are legally and regulatorily bank depositors, not stablecoin holders.
This distinction is vital for the economic function of the banking system. A dollar held in a Cari token can still be lent out multiple times through the credit creation process, whereas a dollar held in USDC cannot. Ludwig's emphasis on keeping insured deposits at the core of economic activity is not mere rhetoric but a statement about preserving the banking system's ability to create money and fund the broader economy.
Infrastructure Behind the Network
The platform uses Prividium, a permissioned privacy-preserving blockchain technology developed by Matter Labs, which connects to Ethereum via ZKsync. The privacy layer addresses a primary historical objection banks have had to using public blockchains. On a fully transparent public chain, transaction data is visible to anyone, raising compliance concerns.