39 US Banking Groups Form BankChain Alliance for 2027 Blockchain Launch

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39 US Banking Groups Form BankChain Alliance for 2027 Blockchain Launch

Highlights:

  • BankChain Alliance is planning a shared blockchain network backed by 39 US state banking groups.
  • Banks could use the network for tokenized deposits, stablecoins and faster payments.
  • The group has not named its technology partner or participating banks.

Thirty-nine US state banking associations formed the BankChain Alliance on Aug. 25 to develop a shared blockchain network for banks. The associations represent thousands of financial institutions across 39 states. Banking groups from Texas, Florida, New York, Pennsylvania, Ohio and Washington joined the initiative. Several associations representing banks in rural states also joined the project.

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The Texas Bankers Association helped launch the BankChain Alliance to develop shared onchain infrastructure for US banks. The associations plan to create a nationwide blockchain network that participating banks can jointly own and use. BankChain plans to invite US banks of every size to acquire ownership interests in the network. However, no individual bank had publicly committed to participation when the associations announced the project.

BankChain plans to support tokenized deposits, stablecoins, smart payments and automated settlement through the shared network. The system could also support round-the-clock transactions and faster settlement between participating financial institutions. BankChain plans to launch the network during 2027, but the alliance has not announced an exact activation date. It has also not announced a pilot or testing schedule.

Kathy Kraninger will serve as interim chair of BankChain and is currently leading the Florida Bankers Association. Kraninger previously led the Consumer Financial Protection Bureau before taking her current banking association role. She will lead BankChain during its early development while members work toward the proposed 2027 rollout.

BankChain Alliance Plans Tokenized Deposits and Payments

BankChain Alliance is selecting a technology partner to build the shared blockchain network before its targeted 2027 launch. However, BankChain has not named any technology companies under consideration. The alliance also wants the platform to connect with other blockchain networks.

BankChain plans to let participating banks represent conventional customer deposits as digital tokens on the shared ledger. Tokenized deposits represent customer claims against individual banks and remain liabilities on each issuing bank’s balance sheet. Customers could therefore use tokenized deposits for blockchain transactions while their money remains a liability of the issuing bank.

BankChain plans to add smart payment tools that can automate settlement after parties meet specified conditions. Banks could use smart contracts to release escrow payments or automate transactions linked to supply-chain finance. Automated settlement could also reduce processing delays when members transfer tokenized deposits or other supported digital assets.

Meanwhile, the FDIC recently proposed applying conventional deposit treatment to eligible tokenized deposits when banks use blockchain-based recordkeeping. US banking trade groups have voiced their support for the technology-neutral approach. They argue that blockchain technology should not remove deposit protection when banks continue meeting existing legal requirements.

Other Banks Are Building Similar Networks

BankChain enters a US banking market where major, regional and community lenders are developing other shared onchain payment systems. The Clearing House announced a separate onchain money initiative in June. JPMorgan Chase, Bank of America, BNY, Citi and Wells Fargo support The Clearing House project.

The Clearing House plans to settle tokenized deposits between banks and connect those transactions with its RTP and CHIPS systems. Its existing payment systems clear and settle more than $2 trillion in transactions each day. Meanwhile, BMO is preparing round-the-clock tokenized cash services through CME Group infrastructure and Google Cloud Universal Ledger. BankChain still needs a technology provider, governance rules and individual bank commitments before its planned 2027 rollout.

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