U.S. state banking associations plan to launch their own nationwide blockchain network

After a year of policy battles in Washington between bankers and the crypto sector, the banks’ state associations have announced they intend to launch a new bank-run blockchain network to facilitate financial innovations, including smart payments, tokenized deposits and stablecoins.

Thirty-nine of the state banking associations signed on to the “BankChain Alliance” with an aim to build out the blockchain by next year, they said in a Tuesday statement, describing the project as “industry-owned, industry-designed and industry-governed.” It’s “an unprecedented collaboration representing thousands of banks,” said Kathy Kraninger, the head of the Florida Bankers Association and a former director of the Consumer Financial Protection Bureau.

Kraninger, who is serving as interim chair of the project, said it’ll be a secure, regulated network “that allows institutions of all sizes to provide modern capabilities so they can continue serving customers safely and efficiently in rural, urban and regional communities across the country.” The confederation of banks is still looking to hire a technology partner to build the project, which it intends to be “interoperable with other networks,” according to the statement.

To some degree, blockchain technology and cryptocurrency were created in answer to frustrations with the banking system, though bankers have been rapidly adopting certain innovations that have sprung from the sector.

Last month, Swift, the bank-owned messaging network common across the global banking sector, announced that 17 banks — including Citi, BNY and Wells Fargo — were set to start testing actual transactions of tokenized digital assets on its blockchain-based ledger.

However, in April, banking groups sought to slow down the implementation of regulations stemming from last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act that governs stablecoin issuers. Read More: Banking groups escalate fight over stablecoin yield ahead of Senate vote