Lloyds, NatWest, and Barclays have carried out two remortgage transactions using tokenised deposits. Separately, three banks, including HSBC, ran a P2P payment that simulated an online marketplace purchase. Reuters reports that these are the first transactions in which banks have used tokenised deposits to move money between themselves. UK Finance, the industry association for the UK banking sector, confirmed the details.
The trials form part of the Great British Tokenised Deposit project, run by UK Finance. The participating banks committed to the initiative through a pilot launched in 2025.
Addressing fragmentation across bank ledgers
Banks and other financial institutions have been exploring ways to integrate blockchain into their IT systems for more than a decade. This work has involved creating tokens that represent assets such as deposits, stocks, bonds, and currencies. Because each lender built its own blockchain-based system, however, institutions could not transact with one another. The interbank transfers completed under the UK Finance project are designed to address this limitation.
In the simulated marketplace purchase, programmable deposits set funds aside in the buyer’s account. The money was released to the seller only after the goods had been received. According to Jana Mackintosh, UK Finance‘s managing director for Payments and Innovation, the test showed that the technology could lower fraud risk. Money moved between accounts, but no real goods changed hands.
In the two remortgage transactions, locked funds were released automatically once the property transaction had been completed.
Regulatory backdrop and the stablecoin debate
Banks argue that moving tokenised assets could be cheaper and more efficient than existing systems. The Bank of England has said it would prefer banks to develop tokenised deposits rather than stablecoins, which are crypto tokens pegged to USD or other currencies.
The distinction is partly legal and partly structural. Tokenised deposits have the same legal status as money held in a bank account. Stablecoins, by contrast, are typically issued by private companies and draw money out of the banking system. This has raised concerns about the cost of credit and monetary sovereignty.
