Five Regional Banks Launch Tokenized Deposit Network: A Flow Analysis

The Cari Network is a defensive move by regional banks to retain deposit flows. The group plans to release a minimum viable product in March, followed by a pilot in the third quarter, with a full commercial rollout by year-end. This timeline shows a deliberate, phased approach to entering a new market.

The core product is tokenized deposits that function like stablecoins for instant transfers but retain FDIC insurance. Tokens issued on the network represent standard bank liabilities, keeping them eligible for deposit insurance up to the usual limits. This design aims to offer the speed and transferability of digital assets while maintaining the legal status and protections of traditional bank deposits.

The regulatory catalyst is the passage of the GENIUS Act, which created a defined path for payment stablecoins and raised the stakes for banks. The act's debate highlighted a major vulnerability: the potential for up to $6.6 trillion in bank deposits to flow out of the system if consumers could earn rewards on stablecoin holdings. This regulatory clarity and the associated competitive threat are driving banks to build their own tokenized alternatives.

Deposit Flow Implications and Competitive Threat

The competitive threat is massive. Stablecoins have grown into a core financial layer, with a total market cap of approximately $303 billion by late 2025. More importantly, they have become substantial buyers of short-term Treasury securities, directly competing with banks for the safest, most liquid assets. This creates a direct drain on the deposit base banks rely on for funding.

The Cari Network's defensive goal is clear: to keep deposits within the banking system by offering the same 24/7 instant payments that stablecoins already provide. The network's design aims to replicate the speed and transferability of digital assets while maintaining FDIC insurance and regulatory compliance. This is a direct response to the vulnerability exposed by the GENIUS Act, which highlighted the potential for up to $6.6 trillion in deposits to flow out of banks if consumers could earn rewards on stablecoin holdings.

Yet the scale of the challenge is daunting. The five participating banks represent a combined asset base of roughly $780 billion, a significant but fragmented deposit pool. In contrast, the stablecoin market they seek to counter is already a multi-hundred-billion-dollar ecosystem. The network's success hinges on its ability to convert this fragmented banking liquidity into a unified, high-speed payment rail that can compete with the established flow of digital assets.

Catalysts, Risks, and What to Watch

The network's success hinges on a single, critical flow: adoption. The primary catalyst is whether these tokens become a daily payment tool for customers and banks, or remain a niche product. The initial MVP and Q3 pilot are designed to test this. If the tokens are used for routine transfers, they could lock in deposit flows. If not, the network's value proposition for banks is severely limited.

A key risk is regulatory ambiguity. While the tokens are designed to retain FDIC insurance, the specific rules for tokenized deposits are still emerging. Any guidance that restricts functionality or interoperability could delay the network's expansion beyond the initial consortium. The ongoing debate over the GENIUS Act, which sought to ban interest on stablecoins, shows the political sensitivity around this space. Regulatory uncertainty remains a material overhang.

Critical near-term signals will be the Q3 pilot results and any formal guidance from the FDIC or OCC. The pilot will reveal user adoption and technical stability. More importantly, any official stance from the bank regulators on the legal status and oversight of tokenized deposits will provide clarity. The network's full commercial rollout by year-end depends on a favorable outcome from both.