Crypto Growth Forces Banks to Solve Multi-Chain Fragmentation

Despite the hype and headlines, institutional and financial blockchain products are no silver-bullet panacea for legacy money movement frictions.

The early promise of blockchain was around efficiency thanks to its immutable, shared ledger that eliminated reconciliation, reduced intermediaries and accelerated settlement. But as digital assets proliferated, blockchain’s headline simplicity has given way to operational fragmentation.

There is, after all, no single blockchain. There are many. For adoption to scale, they will need to be made to work together.

That shift is now showing up in hiring patterns. Wall Street’s latest recruitment push is not centered on experimental labs, but on “chain jugglers,” or engineers who can connect disparate blockchain ecosystems into something resembling a coherent and interoperable financial infrastructure. These specialists are tasked with stitching together distributed ledgers that were never designed to communicate, ensuring that assets, payments and records can move seamlessly across them.

For example, a recent job posting from Morgan Stanley revealed that the bank is seeking a blockchain software engineer to lead projects integrating at least four different blockchain networks, Hyperledger, Polygon, Canton and Ethereum. The emphasis is not on building yet another blockchain but on making existing ones interoperable enough to support institutional-scale activity.

See also: Institutional Interest Is Stress Testing Blockchain’s Financial Interoperability

The Rise of the Multi-Chain Banking Stack

In practice, digital assets, whether stablecoins or other cryptocurrency tokens, can be issued across multiple blockchains, permissioned enterprise ledgers and a growing list of specialized networks. Each issued token has its own consensus model, programming environment, governance structure and security assumptions. The one thing every blockchain has in common is that a digital dollar or tokenized bond created on one chain cannot automatically move to another.

The result can be a patchwork system where liquidity is siloed, operational complexity is multiplied and interoperability is often improvised through bespoke bridges or custodial workarounds.

Chain juggling roles sit squarely in blockchain’s emerging infrastructure phase. Their success will be measured by whether transactions move smoothly, systems reconcile automatically and regulators gain confidence in the underlying architecture.

Financial institutions now recognize that interoperability is not a feature to be added later; it is the architecture. Engineers must work to design financial systems capable of translating data models, synchronizing state across ledgers and ensuring that transactions executed on one network are reflected reliably on another. This includes everything from identity verification and smart contract logic to settlement finality and asset custody.

The technical challenge resembles building global payments infrastructure in the 1990s, when banks had to reconcile incompatible messaging standards and domestic clearing systems.

At the base layer are the individual networks themselves, public, private or hybrid, with each chosen for specific use cases. A permissioned ledger may handle regulated asset issuance, while a public chain offers programmability or global reach. Above that sits an interoperability layer responsible for translating data, coordinating transactions and managing cross-chain messaging.

Read more: The Crypto CFO Playbook for Navigating Blockchain’s 3 Layers

Avoiding the ‘New Silos’ Problem

One of the paradoxes facing banks is that blockchain, designed to eliminate silos, has the potential to create new ones if interoperability is neglected. A tokenized asset that cannot move across networks is effectively confined to a digital island, reducing liquidity and complicating risk management.

Competition Policy International (CPI), a PYMNTS company, explored this topic in an October discussion with Christian Catalini, founder of the MIT Cryptoeconomics Lab, research scientist at the MIT Sloan School and co-founder and chief strategy officer of crypto payments company Lightspark.

Catalini warned that without interoperability, the U.S. could stumble into a system of “corp chains”: closed, proprietary payment networks reminiscent of the 19th-century railroad gauge wars, when incompatible tracks crippled trade. In the 1840s in the U.K., and later in the U.S., private railways built tracks of different widths. Freight and passengers would pile up at “break of gauge” stations, unloaded and reloaded solely because one company’s standard couldn’t meet another’s.

“Railways were kind of the modern blockchain of the time,” Catalini said, hyped, speculative, messy and eventually indispensable. The lesson for digital money is straightforward. “If we don’t get those rules now right,” he said, today’s payment networks could harden into incompatible rails: “Money, a digital dollar on one network, will not move seamlessly to the other.”

For today’s financial institutions, the era of choosing a chain is ending. The era of making them work together has begun.