Lloyds has completed its first digital assets transaction using Tokenised Deposits. The bank said this was the first time in the UK that tokenised deposits had been issued on a public blockchain. It also said this was the first global use of sterling deposits in this format.

The transaction was carried out on the Canton Network. This is a public blockchain designed for regulated financial markets. Lloyds Bank PLC issued the Tokenised Deposits on the network. Lloyds Bank Corporate Markets then used the deposits to purchase a Tokenised Gilt issued by Archax.

Archax Transaction Shows Blockchain-Bank Connectivity

Following the purchase, Archax transferred the underlying funds back into its standard account at Lloyds. The movement of funds showed how transactions can flow between blockchain-based systems and existing banking infrastructure. Lloyds said the process demonstrated interoperability between the two environments.

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Surath Sengupta, Head of Transaction Banking Products at Lloyds, said the transaction offered “a glimpse into the future of finance.” He said tokenisation brings “real-world assets onto blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term infrastructure” and allows transactions with greater speed and flexibility. He added that Tokenised Deposits “can continue to earn interest and remain protected by the Financial Services Compensation Scheme.”

Lloyds Pilot Shows Digital Gilt Potential

According to the bank, tokenisation allows real-world assets to be represented in digital form. These assets can then be transferred and settled more quickly than through traditional systems.

Lloyds said the use of a public blockchain differs from private ledgers by allowing wider participation, while still maintaining confidentiality for regulated activity.

The transaction took place as the UK government continues to explore the potential issuance of digital securities.

Lloyds said the pilot showed how established instruments, such as Gilts, could operate within a digital framework without changing their underlying structure.

Tokenised Assets Deliver “Transparency and Instant Settlement”

The bank said tokenised deposits allow businesses to transact on blockchain networks while retaining features of conventional deposits. These include real-time settlement, the use of smart contracts to automate certain processes, and a permanent transaction record to support transparency and compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term.

As part of the pilot, Lloyds operated its own validator node on the Canton Network. The bank said this allowed it to verify transactions directly and apply the same standards used for managing cash deposits.

Lloyds said the transaction builds on earlier work with Archax. Last year, the two firms used units of a Tokenised Money Market Fund as collateral in a separate transaction.

Graham Rodford, CEO and co-founder of Archax, said the transaction showed how tokenised real-world assets can deliver “real-world benefits for institutions.” He referred to “instant settlement and enhanced transparency” as key outcomes.