Digital asset infrastructure firm BitGo has partnered with ZKsync to build fiat tokenisation infrastructure aimed at banks.
The collaboration signals a push to connect traditional finance with blockchain systems without relying on stablecoins.
The planned products focus on institutional-grade settlements that operate continuously, offering faster processing, enhanced privacy, and improved security.
The move comes as banks explore ways to modernise payments and settlement systems while remaining compliant with regulatory requirements.
Focus on bank adoption
The partnership is designed to help banks tokenise fiat deposits directly on blockchain networks.
This allows financial institutions to process transactions instantly rather than relying on slower legacy systems.
BitGo, founded in 2013, has played a central role in crypto infrastructure development, particularly through its multi-signature wallet technology.
That innovation improved asset security and encouraged institutional participation in digital assets.
By combining BitGo’s custody expertise with ZKsync’s Layer 2 scaling capabilities, the project aims to create a system that banks can adopt without major operational changes.
The infrastructure is being built to meet compliance standards, which remains a key requirement for financial institutions entering blockchain-based finance.
Moving beyond stablecoins
Unlike tokenisation efforts led by Ripple Labs, the BitGo and ZKsync initiative does not depend on stablecoins.
Instead, it focuses on representing fiat deposits directly on-chain.
This distinction is significant because stablecoins have been a point of friction between banks and crypto firms.
Financial institutions have argued that yield-bearing stablecoins can draw deposits away from traditional banking systems.
By avoiding stablecoins, the new infrastructure attempts to sidestep this conflict.
It offers banks a way to retain control over deposits while still benefiting from blockchain-based efficiency and programmability.
Testing phase underway
The project is currently in a testing phase, with both companies preparing for a broader rollout later this year.
Expectations are centred on institutional adoption once the system becomes fully operational.
If successful, the infrastructure could support a wide range of financial use cases, including faster settlements, cross-border transactions, and new forms of tokenised financial products.
The use of Layer 2 technology is expected to reduce costs and improve transaction speeds compared to mainnet Ethereum, making the system more practical for large-scale banking operations.
Regulatory and market tensions
The partnership emerges against a backdrop of ongoing tensions between banks and stablecoin issuers.
Policymakers have attempted to address these concerns through proposed frameworks such as the Clarity Act.
At the same time, industry developments continue to complicate the landscape.
Coinbase recently pushed back against efforts to restrict stablecoin yields, highlighting divisions within the sector.
While the BitGo and ZKsync collaboration does not directly resolve these disagreements, it introduces an alternative path for integrating blockchain into traditional finance.
The scale of this shift is notable.
By enabling fiat tokenisation at the banking level, the initiative could open access to an estimated $450 trillion in traditional financial assets, potentially accelerating the convergence between legacy finance and blockchain technology.
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