Lloyds Banking Group has completed what it describes as the first-ever UK transaction of digital assets using tokenised deposits on a public blockchain.

The move, which was also a global debut for sterling deposits, involved the bank issuing tokenised deposits on the Canton Network, a blockchain designed for regulated financial markets.

Tokenised deposits are a digital representation of traditional sterling commercial bank money.

Lloyds Bank Corporate Markets, part of Lloyds Banking Group, used these deposits to purchase a tokenised gilt from regulated UK crypto exchange Archax.

Archax moved the underlying funds back into its regular Lloyds account, which the bank said demonstrates how easily transactions can flow between blockchain and traditional banking systems.

It added that with the government exploring the possibility of issuing its own digital securities, the transaction shows how tokenisation can bring traditional instruments such as gilts into the digital ecosystem.

As part of the transaction, Lloyds also ran its own validator node on the Canton Network, which verifies and secures transactions on the network, which it said ensures customer resources are managed with the same security and standards it uses for cash deposits.

“This transaction offers a glimpse into the future of finance; faster, smarter, and more efficient," said Surath Sengupta, head of transaction banking products, Lloyds. "Tokenisation allows us to bring real-world assets onto blockchain infrastructure, creating opportunities for businesses to transact with greater speed, transparency, and flexibility."

Sengupta added that these benefits come without losing the advantages of traditional cash, as tokenised deposits can continue to earn interest and remain protected by the Financial Services Compensation Scheme.

"This pilot is a critical step towards building the financial ecosystem of the future," he added.

The initiative builds on a previous collaboration with Aberdeen Investments and Archax in July last year, where the bank used units of a tokenised money market fund as collateral for foreign exchange.

In September 2025, it was announced that Lloyds was joining a consortium of Britain's largest banks to launch a pilot project to test the first UK live transactions of tokenised sterling deposits.

The initiative, which is being led by UK Finance, also involves Barclays, HSBC, NatWest, Nationwide and Santander, and will run until mid-2026.

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