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Points of Focus
- Banks are increasingly adopting blockchain technology without necessarily embracing permissionless public networks.
- Bank-controlled networks offer institutions greater control over compliance, privacy, governance, and transaction access.
- The shift challenges the assumption that institutional blockchain adoption will automatically drive activity onto Ethereum and other public chains.
On Aug. 25, 39 state banking associations dropped a hammer, announcing the BankChain Alliance, a massive coalition representing thousands of US institutions and a staggering $21.8 trillion in assets.
Set to launch in 2027, this industry-owned network plans to hijack blockchain’s best features, such as stablecoins, tokenized deposits, smart payments, and instant settlement. These features would be brought entirely in-house.
JUST IN: 🇺🇸 Bank of America, Wells Fargo, Santander & over a dozen major banks move forward with plans to launch a crypto stablecoin.
— Watcher.Guru (@WatcherGuru) August 26, 2026
The debate over whether blockchain works is officially dead. Now, the battle is over control.
The question is how this will turn out for public blockchains such as Ethereum and Solana. If Wall Street and main street banks can build their own financial playground behind a velvet rope, why would they want to deal with a public crypto network?
Banks want blockchain without surrendering control
BankChain’s pitch starts with familiar problems.
Bank transfers can remain constrained by operating hours, intermediary processes, and legacy infrastructure. Blockchain-based systems promise faster settlement and programmable transactions without requiring banks to abandon regulated financial products.
But BankChain is not being designed as another crypto network looking for banks to join.
The alliance describes the project as “industry-owned, industry-designed, and industry-governed.” Its aim is to give community, regional, and large banks access to blockchain infrastructure without making them dependent on outside technology companies or crypto-native intermediaries.
Kathy Kraninger, interim chair of BankChain Alliance and president and CEO of the Florida Bankers Association, said the initiative is intended to give banks of different sizes access to the same infrastructure while preserving their role in serving local customers and businesses.
Important details regarding the project haven’t yet come out. BankChain has not selected a technology partner, and its final technical architecture is yet to be announced.
It is too early to classify BankChain as either a private or public blockchain.
What is clear is the governance model: Banks want control over the infrastructure they intend to use.
Public networks face a control problem
The preference exposes one of the central points of contention between traditional finance and public blockchains.
Ethereum and other public networks provide something difficult for individual financial institutions to reproduce: Shared infrastructure connecting users, applications, assets, and liquidity without requiring a single institution to operate the underlying network.
For banks, however, openness creates complications.
Financial institutions must identify customers, enforce sanctions and Anti-Money Laundering (AML) requirements, protect sensitive transaction information, and operate within clearly defined regulatory responsibilities. Public blockchains were not originally designed around those requirements.
Bank-controlled networks reverse the priorities.
Participation, governance, and compliance can be designed around financial institutions from the beginning. Banks can determine which assets move through the system and under what conditions.
But greater control comes with a potential cost.
A blockchain shared among banks can improve settlement while still becoming another financial silo if assets cannot easily move elsewhere.
This is why BankChain’s stated intention to interoperate with other networks may ultimately matter more than whether its blockchain is technically public or private.
Banks experimenting with both models
BankChain is far from the only institutional blockchain experiment.
SWIFT has developed a blockchain-based shared ledger for tokenized cross-border payments, with 17 banks involved in its initial rollout. Canton Network is attracting financial institutions with an architecture designed to combine interoperability with transaction privacy.
Yet banks are also moving onto public blockchain infrastructure.
JPMorgan’s JPM Coin, for example, allows institutional clients to move tokenized bank deposits on Base, the Ethereum layer 2 developed by Coinbase. Access remains controlled, but settlement occurs using public blockchain infrastructure.
Meanwhile, UBS and Nethermind have tested mechanisms for embedding compliance controls into transactions conducted over public Ethereum.
The emerging picture is therefore more complicated than banks choosing private blockchains over public ones.
Financial institutions are testing both.
The question is which functions ultimately require public infrastructure and which banks prefer to keep inside controlled environments.
The real battle is liquidity vs. control
This distinction could become particularly important as more financial assets move onchain.
A bank-controlled network offers known counterparties, predictable governance, privacy, and compliance. A public blockchain offers something different: access to a larger ecosystem of assets, applications, and liquidity.
Consider a future in which one group of banks issues tokenized deposits through BankChain, other institutions hold tokenized securities on Canton, another payment system settles through SWIFT, and financial companies simultaneously operate assets on Ethereum or Base.
Blockchain may have modernized the infrastructure without eliminating fragmentation.
Interoperability then becomes the critical layer.
If tokenized money and securities can move efficiently between those systems, banks may not need to choose a single blockchain model. Controlled networks could handle internal settlement, while public networks provide distribution, external liquidity, or connectivity with other digital assets.
If those networks remain isolated, however, finance risks replacing today’s databases and payment silos with blockchain-based versions of the same problem.
Chandler Fang, founder of t54, the trust layer for the agentic economy, stated while talking to AlphaWire,
“Banks can absolutely capture a lot of blockchain’s benefits on networks they control, so I don’t think public chains automatically win. The real advantage of networks like Ethereum or Solana is interoperability and access to liquidity beyond one institution’s walls.
“A bank-controlled network can be incredibly efficient internally, but you risk recreating the same fragmented financial system with better technology underneath it.
“Public blockchains provide shared infrastructure where banks, stablecoins, fintechs and eventually AI agents can transact across institutional boundaries. The strongest model is probably a hybrid one in which banks maintain the controls they need while using public rails where openness, liquidity and composability genuinely create additional value.”
Public blockchains still have something banks cannot easily build
Public networks do not necessarily need to become bank blockchains to remain relevant.
Their strongest advantage is neutrality.
Ethereum is not controlled by JPMorgan, BankChain Alliance, or any individual financial institution. Assets issued by unrelated organizations can exist on the same infrastructure and interact through common technical standards.
The shared environment is the foundation of crypto’s composability. It is potentially an important source of liquidity as tokenized financial markets expand.
The challenge for public networks is making those advantages compatible with institutional requirements around privacy, identity, and compliance.
Banks, meanwhile, face the opposite challenge: preserving control without recreating closed financial ecosystems.
BankChain will provide an important test when its architecture takes shape and the network moves toward launch.
Banks are increasingly validating one of crypto’s oldest arguments: Money and financial assets can move through programmable shared ledgers.
What they have not validated is the assumption that those ledgers must be permissionless crypto networks.
The next contest is no longer about whether finance moves onchain; it is about who controls the rails when it does.
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