Lloyds Bank and Archax have completed the UK’s first public blockchain transaction using tokenized deposits. The transaction marks the first time sterling-denominated bank deposits have settled on a public blockchain. Lloyds issued tokenized deposits and used them to purchase a tokenized UK Gilt from Archax. The trade ran on the Canton Network, which supports regulated financial activity with privacy controls. This milestone shows how traditional banking instruments can operate directly on blockchain infrastructure without leaving regulatory frameworks intact.
The transaction also demonstrated seamless movement between blockchain and conventional bank accounts. After settlement, Archax transferred the underlying funds back into its standard Lloyds account. This step confirmed operational interoperability rather than a closed pilot. According to Archax, the process maintained existing safeguards while improving transaction speed and transparency.
@LloydsBank and @ArchaxEx complete UK’s first public blockchain transaction using Tokenised Deposits… https://t.co/9Gg0FH4dEC pic.twitter.com/JSAbMninPk
— Archax (@ArchaxEx) January 7, 2026
How Tokenized Deposits Work in Regulated Banking
Tokenized deposits represent traditional bank money issued in digital form on a blockchain. Unlike stablecoins, banks fully back these deposits and keep them on balance sheet. As a result, customers retain protections such as interest accrual and deposit safeguards. Lloyds confirmed that these tokenized deposits remain subject to the same controls as cash deposits. This structure makes tokenized deposits suitable for regulated financial markets.
The Lloyds transaction shows how banks can extend existing products onto blockchain rails. Instead of replacing banking infrastructure, tokenization adds a programmable settlement layer. This approach reduces counterparty risk through near-instant settlement. It also simplifies reconciliation across institutions. As reported by Finextra, Lloyds operated its own validator node to secure transactions directly.
Why the Canton Network Matters for Institutions
The Canton Network supports public blockchain access while preserving confidentiality for regulated entities. Unlike open ledgers with full transparency, Canton restricts data visibility to approved participants. This design aligns with financial compliance requirements. Lloyds selected Canton to ensure privacy without sacrificing interoperability. The network already supports several institutional-grade digital asset initiatives.
By running a validator node, Lloyds maintained direct oversight of transaction verification. This model allows banks to apply internal risk and security standards on-chain. It also reduces reliance on third-party infrastructure providers. The architecture signals how public blockchains can meet institutional needs. According to industry observers, Canton bridges the gap between open networks and private ledgers.
Building real 24/7 markets requires:
— Canton Network (@CantonNetwork) September 16, 2025
1️⃣ Instantly convertible stablecoins
2️⃣ High utility tokenized collateral
3️⃣ Programmable privacy
Canton delivers all three, converging TradFi and DeFi at scale. pic.twitter.com/JPHwlDrknu
Implications for UK Capital Markets
The transaction involved a tokenized UK Gilt, highlighting blockchain’s role in sovereign debt markets. Tokenized gilts enable faster settlement and improved liquidity management. They also support atomic delivery-versus-payment workflows. This reduces operational complexity for large institutions. The pilot aligns with broader UK efforts to modernise market infrastructure.
UK regulators continue to explore digital securities frameworks. This transaction offers a practical reference point for policy development. It shows how existing assets can transition without creating parallel systems. As banks and asset managers adopt similar models, capital markets may see incremental efficiency gains. The Lloyds and Archax pilot provides a concrete operational example.
What to Watch as Tokenization Expands
Tokenized deposits could support collateral management, repo markets, and cross-border payments. Banks already test similar models across major currencies. Interoperability between institutions remains a key challenge. However, pilots like this establish shared technical standards. They also build confidence among regulators and counterparties.
Future deployments may involve multi-bank settlement networks and broader asset coverage. Adoption will depend on scalability, legal clarity, and integration costs. Still, this transaction signals steady progress rather than experimentation. Follow Genfinity for ongoing coverage of institutional blockchain developments and market infrastructure updates.
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