UK Finance Partners with Banks to Pilot Tokenized Sterling Deposits

TLDR

• UK Finance partners with Barclays, HSBC, and four other banks for tokenized deposits.
• The pilot project focuses on online payments, remortgaging, and bond settlements.
• Quant Network provides blockchain infrastructure for the UK’s tokenized deposit project.
• The UK’s FCA is finalizing crypto regulations, expected to take effect in 2026.

UK Finance has launched a pilot project to explore tokenized sterling deposits (GBTD), a digital version of traditional British pound bank money. In partnership with six major UK banks, including Barclays, HSBC, and Lloyds Banking Group, the initiative aims to test the potential benefits of tokenized deposits for businesses, consumers, and the UK economy. The project is set to run until mid-2026, with key objectives focusing on payment control, fraud prevention, and enhanced settlement efficiency.

UK Finance and Major Banks Partner for Tokenized Sterling Deposits

UK Finance, a prominent UK financial services trade association, has announced the launch of a pilot program for tokenized sterling deposits. This initiative aims to create a digital representation of the British pound, which would be backed by traditional commercial bank money. The pilot involves six major UK banks: Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, and Santander.

The project will run until mid-2026, providing ample time for the involved banks to assess how the new system can benefit both consumers and businesses. One of the primary goals of the pilot is to improve payment control, prevent fraud, and increase the efficiency of settlement processes. The findings from the pilot will help shape the future of digital money in the UK financial landscape.

Role of Quant Network in the Project

Quant Network, known for its expertise in blockchain interoperability, will provide the infrastructure for the GBTD project. The company’s involvement builds on its work with the Regulated Liability Network (RLN), a UK-led initiative for shared ledger-based financial market infrastructure. Quant’s technology aims to ensure the seamless operation of tokenized deposits within the existing banking framework.

Gilbert Verdian, the founder and CEO of Quant, emphasized the transformative potential of programmable money. He noted that the pilot project is not only about improving payment systems but also about enabling new methods of managing and transferring value. Through this collaboration, Quant seeks to support the future of digital finance in the UK by providing a secure and scalable infrastructure.

Focused Use Cases for Tokenized Deposits

The pilot will focus on three main use cases to test the real-world applications of tokenized sterling deposits. These include payments for online marketplaces, remortgaging processes, and wholesale bond settlements. These use cases were chosen for their relevance to current financial transactions, where tokenized deposits could streamline processes and reduce costs.

For example, in online marketplace payments, the use of tokenized deposits could offer faster and more secure transactions. In remortgaging, it could help simplify the process by reducing the need for intermediaries, thus speeding up approvals and disbursements. For wholesale bond settlements, tokenized deposits could enhance efficiency by making it easier to transfer assets between financial institutions.

Upcoming FCA Regulations on Crypto Assets

The pilot for tokenized sterling deposits comes at a time when the UK’s Financial Conduct Authority (FCA) is finalizing its regulatory framework for crypto assets. The new regulations are expected to come into full effect in 2026, aiming to provide a clearer framework for the operation and management of digital assets in the UK.

While the UK Treasury has already differentiated between stablecoins, tokenized deposits, and electronic money in its policy notes, tokenized deposits fall under traditional banking regulations. This distinction is important as it ensures that the pilot project remains aligned with existing financial systems while exploring new technologies. As the FCA prepares for the full launch of its crypto regulations, the success of the tokenized deposit pilot could help guide future policies for digital financial services in the UK.

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