Main Street's Bankers Plan Their Own Blockchain, While Galaxy Turns Bitcoin Into Retail Collateral

While Bitcoin HODLers are in good spirits after the incredible price rally in August, two interesting stories emerged that have nothing to do with price.

TL;DR

• 39 US state bankers' associations formed the BankChain Alliance, which plans to build a shared, industry-owned blockchain network for tokenized deposits, stablecoins, smart payments, and automated settlement, targeting a 2027 launch.

• Galaxy launched a revolving credit line that lets eligible clients borrow against Bitcoin, Ether, and Solana.

Main Street Walks Into a Blockchain 🏦

Much of the stablecoin and tokenized-deposit story has focused on Wall Street banks, card networks, and major issuers. Community banks have usually been cast as the likely victims of the transition. 

Last week, 39 state banking groups responded.

The state bankers associations formed the BankChain Alliance, a coalition planning a shared, industry-owned blockchain network that could support tokenized deposits, stablecoins, smart payment tools, and automated settlement, targeting a 2027 launch.

The scale deserves a second read. According to Alliance figures based on FDIC data as of March 31, the participating associations' member rolls cover 3,283 banks holding a combined $21.8 trillion in assets, from Alabama to Wyoming. Those figures describe the associations' membership, not 3,283 banks that have already committed to the network.

Former CFPB director Kathy Kraninger is serving as interim chair. A technology partner has not yet been selected, and the Alliance says the network will be interoperable with other systems, with banks across the country invited to become owners.

I spent years at Deutsche Börse, so let me tell you why this structure looks familiar. Member-owned market infrastructure has deep roots. Many exchanges began as mutual organizations owned by the firms that used them, giving participants a stake in the critical infrastructure they depended on.

The BankChain Alliance plans to do the same now on the blockchain, and if it succeeds, community and regional banks can access the technology without renting it from a money-center competitor.

Whether it ships by 2027 is a fair question. Bank consortiums have a mixed record on delivery, and BankChain has not yet named its technology provider, its architecture, or its participating banks. But it’s interesting to see that institutions that were supposed to be disrupted are organizing to own the infrastructure instead.

You Can Put Your Bitcoin to Work Without Selling It 💳

The second story is smaller in dollars and bigger in principle.

Galaxy launched a Crypto Portfolio Line of Credit on its GalaxyOne platform, allowing eligible US clients to borrow against Bitcoin, Ether, and Solana, including staked SOL, without selling the assets.

The terms include a variable 8.99% APR, no origination fee, a 50% origination loan-to-value ratio, and interest-only monthly payments. Galaxy says the product is available to eligible clients in 40 US states. Funding is typically available instantly once a line is open, though Galaxy notes it can take one or two business days in rare cases, and clients can withdraw funds as dollars or USDC.

Eligible assets pool into a single collateral base, and Galaxy says pledged crypto isn’t rehypothecated. According to Galaxy, pledged assets will not be lent out or reused while they back the line. Probably a smart move.

Readers of this newsletter know why I care about this one. Borrowing against Bitcoin instead of selling it makes a lot of sense (when done responsibly) because why would you ever want to sell an asset that has historically always appreciated over time?

Crypto-backed lending isn’t new, by the way. Specialist lenders have offered Bitcoin-backed loans since at least 2017. What Galaxy has done is package a revolving, multi-asset version inside a broader retail investment platform, with clearly stated headline terms.

A great test to see whether an asset is becoming financial infrastructure is whether more of the system accepts it as collateral. Gold and US Treasuries cleared that bar long ago, but it looks like Bitcoin’s next.

Elsewhere in Bitcoin 📖

A quick look at what else has been happening across Bitcoin and digital assets:

• Strategy bought another 4,603 BTC for $370 million, bringing its holdings to 845,050 BTC

• Strive bought 1,800 BTC for approximately $143 million, bringing its holdings to 23,156 BTC

• The Blockchain Association urged regulators to limit GENIUS Act identity checks to direct relationships between stablecoin issuers and their customers

Your fellow stacker in sats,

Patrick Lowry

PS: If you want to see how the value of goods and services changes when priced in Bitcoin, check out the Samara Bitcoin CPI. It might give you a new perspective on holding Bitcoin on your company's balance sheet or just as an individual.

Disclaimer: The opinions expressed in this newsletter are solely those of the author and do not necessarily represent the views of any associated company. This newsletter is for educational and informational purposes only and should not be construed as investment, financial, or any other professional advice. Nothing here is a solicitation, offer, or recommendation to buy or sell any asset or to use any service. Investing in cryptocurrencies is highly speculative and carries a significant risk of substantial financial loss, so you must conduct your own thorough research and consult with independent professional advisors before making any decisions.