According to Invezz, digital asset infrastructure firm BitGo has teamed with ZKsync to build a fiat tokenisation framework aimed at banks, a design intended to operate without relying on stablecoins.
The collaboration seeks to connect traditional finance with blockchain ecosystems by delivering institutional-grade settlements that run continuously, offering faster processing, enhanced privacy and improved security. The infrastructure is being developed to meet compliance standards, a must-have for banks venturing into blockchain-enabled finance.
Key takeaways
- The plan targets banks’ tokenisation of fiat deposits directly on blockchain networks, enabling near-instant settlements rather than through legacy rails.
- By combining BitGo’s custody capabilities with ZKsync’s Layer 2 scaling, the effort aims to deliver an on-chain solution banks can adopt with minimal disruption.
- The project is in testing, with a broader rollout expected later this year; potential to expand institutions’ use of tokenised, programmable deposits and possibly unlock a large pool of traditional assets on-chain.
What drove the move
The initiative reflects ongoing efforts by banks to modernise payments while staying compliant with regulatory requirements. Tokenising fiat deposits on-chain could enable instant cross-border and domestic settlements, bypassing slower legacy systems.
BitGo, founded in 2013, has played a central role in crypto infrastructure development, particularly through its multi-signature wallet technology, which bolstered asset security and encouraged institutional participation in digital assets. By pairing BitGo’s custody experience with ZKsync’s Layer 2 scaling, the project aims to deliver a bank-friendly, on-chain settlement mechanism that does not demand major operational upheaval.
Compliance remains a key constraint, with the project designed to meet standards banks require before adopting blockchain-based finance.
Moving beyond stablecoins
Unlike tokenisation efforts led by Ripple Labs, the BitGo–ZKsync plan does not hinge on stablecoins. Instead, it aims to represent fiat deposits directly on-chain. That distinction matters to banks concerned that yield-bearing stablecoins can siphon deposits from traditional banks. The new infrastructure would let banks retain control over deposits while still gaining the efficiency and programmability of blockchain.
Testing phase underway
The project is in a testing phase, with a broader rollout expected later this year. If successful, it could support faster settlements, cross-border transactions and new tokenised financial products, all built on Layer 2 tech that typically reduces costs and increases throughput versus mainnet Ethereum.
Regulatory and market tensions
The collaboration unfolds amid ongoing tensions between banks and stablecoin issuers. Policymakers have proposed frameworks such as the Clarity Act to govern stablecoins. Separately, industry developments continue to shape the landscape; for instance, industry players have publicly debated stablecoin yields. While BitGo and ZKsync’s collaboration does not resolve these disagreements directly, it presents an alternate path for integrating blockchain into traditional finance without relying on stablecoins.
On the scale of impact, tokenising fiat at banking-level rails could open access to a broad set of traditional assets on-chain. Some estimates place the potential market at around $450 trillion in traditional assets that could eventually be tokenised on blockchain rails.
Bigger picture
The BitGo–ZKsync venture sits at the crossroad of fintech innovation and regulatory caution. If the rollout proceeds as planned, it could unlock faster settlements, reduce cross-border frictions and support new on-chain financial products, all while maintaining depositor protections and regulatory compliance.
What to watch next: a broader rollout is anticipated later this year as testing wraps up and regulatory clarity evolves. Investors will monitor how banks weigh the cost savings, security and compliance of Layer 2 settlements and whether this approach accelerates institutional adoption of tokenised deposits.
Source: Invezz. Read more at BitGo, ZKsync partner to bring banks on-chain with tokenized deposits.
