Obstacles, Banks, and Breakthroughs

Author: Prathik Desai, Translation: Block Unicorn

I enjoy exploring how cryptocurrencies are changing the way funds move. It feels great, but the reality is much more complex. Just look at how large institutions have moved money over the past decade to understand the underlying reasons.

Transatlantic bank wire transfers still take one to two days. They need to go through intermediary banks, each step generating reconciliation records, and customers pay about $25 to $45 in fees. This system is almost identical to the architecture of the 1970s, only email has replaced telephone communication, and the SWIFT system has replaced the intricate cabling. Of course, database speeds have improved. But that’s all. Time has not been shortened accordingly.

You might think this is a technical problem, but I believe it’s more of a coordination issue.

Blockchains and stablecoins have existed for over a decade. Yet, they have never fully solved all problems at once. Some blockchains and stablecoins offer the speed that institutions require but do so by making all data public in the name of “transparency.” Others balance speed and privacy but create isolated systems that cannot communicate with each other.

The problem with new technology is that it’s easy to scare off large institutions operating in highly regulated industries, like banks. To get them to migrate to new tech, all pain points must be addressed upfront. Any “solve after migration” approach simply won’t work.

Although it has taken some time, this situation is finally beginning to change. Ironically, banks are now turning to blockchain technology to avoid losing out in the face of digital assets.

Last month, five US banks jointly launched Cari Network, with total assets exceeding $750 billion. This system converts ordinary deposits into digital tokens that can be settled instantly, operate 24/7, and are insured by the Federal Deposit Insurance Corporation (FDIC).

In today’s deep dive, I will introduce how blockchain developers have historically tried to build solutions for institutions and how this time is different.

Swing and Miss

About ten years ago, alliances like R3 and Hyperledger built private blockchains for institutions with ambitious roadmaps, including top global financial players like BNP Paribas, Citigroup, and Barclays. Although these blockchains operated smoothly, and the ledgers were accurate, they remained isolated, unable to interact with anything outside their closed infrastructure.

These efforts eventually faded away. Others shifted to different approaches.

Subsequently, banks began experimenting with public blockchains—mainly Ethereum. This immediately addressed the composability problem. A shared, neutral ledger accessible to everyone enabled banks to interact within their ecosystems. However, solving one problem often created another. On public chains, anyone who knows how to look up transactions can see every counterparty, transaction, and balance using a browser.

What banks need is a single system that offers privacy, compliance, speed, and connectivity.

What Has Changed

Two breakthroughs emerged in 2025: one technological, one demand-driven.

First, let’s understand the technology. Zero-knowledge proofs (ZK proofs) have gained attention for their unique advantages. ZK proofs are a cryptographic method that allows you to prove the validity of a transaction without revealing its details.

Although this technology has existed for years, only recently has it become cheaper and faster. Previously, generating these proofs was prohibitively expensive, making deployment from a business perspective impractical.

The number of transactions processed per second has surged from as low as 400 to at least 15,000. Final settlement times have been reduced to under one second. All of this is achieved while maintaining the privacy of transactions and their parties. In contrast, traditional financial infrastructure takes at least a day to process these transactions.

ZK proofs also address another obstacle perceived by enterprises.

In 2018, a bank evaluating blockchain technology had to hire engineers to build a blockchain from scratch, figure out how to generate proofs, run their own servers, and verify whether all this could translate into business benefits. At that time, they weren’t even sure if the system was feasible.

ZKsync, developed by Matter Labs, is an Ethereum scaling platform that solves this problem by offering blockchain-as-a-service for enterprises. Its institutional product suite (including Prividium, Connect, Gateway, etc.) provides chain deployment, transaction processing, proof generation, compliance tools (KYC checks, role-based access control, login management), and connectivity with other blockchains.

This tech stack allows enterprises to customize configurations and start deploying. Think of it as buying blockchain as a service.

ZKsync isn’t the only company offering such solutions. Canton Network, supported by Goldman Sachs, DTCC, Citadel, and BlackRock, takes a different approach. It doesn’t use zero-knowledge proofs but instead employs a permissioned model, where authorized validators coordinate private transactions among known counterparties.

Both are building the connectivity layer that institutions need. But they differ on whether trust should be established through cryptographic proofs or through contractual governance among known participants.

In my view, currently, there’s little difference between permissioned and permissionless approaches. Both aim to solve the same problem for institutions. In fact, Canton’s institutional partners are even more advanced than ZKsync.

However, some features of ZKsync might encourage institutions to adopt it. As long as fund interactions and flows occur among known parties within familiar jurisdictions, Canton’s permissioned network can operate smoothly. But when companies want to expand across jurisdictions and transact with parties outside Canton’s closed ecosystem, ZKsync can enable cross-jurisdictional composability.

It’s this technological breakthrough that is prompting banks to adopt blockchain technology.

But why would banks abandon their long-standing, proven systems—even if they are slow? Is it just because there are cheaper, faster alternatives?

Do you really think banks will suddenly shift from “blockchain is interesting but impractical” to “blockchain is commercially meaningful” just because a new technology becomes economically viable? Interestingly, whenever companies start losing money, every technology is given “strategic importance.”

Resources Under Siege

Over the past decade, the stablecoin market has grown to $300 billion. They have achieved what banks have long refused to do: transfer funds quickly. Today, every digital dollar in circulation has left the banking system.

The infrastructure I mentioned earlier, such as ZKsync’s Prividium and Canton’s permissioned payment system, are key to helping banks regain market share in digital assets. With these blockchain-as-a-service (BaaS) solutions, banks can transfer existing deposits just like stablecoins, with the same speed and finality for processing and settlement. Plus, there’s an added benefit: banks can achieve all these goals while providing depositors with regulatory protections and balance sheet advantages only banks can offer.

This is already happening in real life.

Cari Network, launched last month by five regional US banks (Huntington Bank, First Horizon Bank, M&T Bank, KeyBank, and Old National Bank), tokenizes bank deposits on ZKsync’s Prividium platform. These deposits remain on the banks’ balance sheets, are FDIC-insured, and settle within seconds.

Cari Network is not an isolated case.

In February 2026, the Central Bank of the United Arab Emirates approved DDSC, a stablecoin backed by dirhams, operating on ADI Chain, built with ZKsync’s proof engine.

In June 2025, Deutsche Bank began building a tokenization platform on a ZKsync-supported chain, reducing the setup time for new funds from months to weeks.

The Future of Institutional Finance

When I write about finance, I often ponder a core question: “How will funds flow in the future?” It’s a thought-provoking question because it reveals the financial behaviors of individuals and businesses.

I believe that, regardless of which group they belong to, most people are not very concerned with the core principles that cryptocurrencies represent. Banks are even less so. I’m sure bank leadership wouldn’t sit in a conference room debating whether decentralization or centralization is better. They wouldn’t care whether their transactions are processed on Ethereum, Solana, or a private network in Timbuktu.

What matters most to them are privacy, composability, and speed. If a system can help businesses save a few dollars while meeting these needs, it will attract their attention. If adopting new technology also has “strategic significance” (like a stablecoin revolution that could disrupt your business), that’s even better.

Therefore, I expect the integration of Web2 and Web3 finance to revolve around technologies that enable more efficient fund transfers. This could be through blockchains supported by ZKsync or Canton, which can transfer tokenized versions of fiat currencies. Or it could be via dedicated payment blockchains built by payment companies like Circle’s Arc, Stripe’s Tempo, and Stable.

I believe both approaches are equally viable. For banks that prefer not to adopt stablecoins, ZKsync’s blockchain-as-a-service (BaaS) is an ideal evolution. For those already integrating stablecoins into their payment systems, supporting digital dollars on a blockchain makes more sense.

But I am certain who the biggest losers will be: those still relying on technologies that transfer and settle funds based on date and time.