Lloyds Banking Group has purchased a tokenised gilt on the Canton Network, marking the first transaction of this kind in the UK and the first tokenised sterling deposit globally.
Lloyds Bank issued tokenised deposits on the Canton Network and purchased a tokenised gilt from digital securities exchange Archax, which then moved the underlying funds into its standard Lloyds account.
The transaction follows an initiative by Lloyds and Archax in July 2025, where the companies used units of a tokenised money market fund as collateral in a foreign exchange trade.
READ MORE: UK sees first tokenised collateral FX transaction
Tokenising deposits will allow businesses to access and trade securities on blockchain and traditional markets using the same cash asset, the group says. This will facilitate instant settlement and the use of smart contracts, which it suggests will improve liquidity while reducing risk and the use of manual processes.
In the UK, the Financial Conduct Authority (FCA) and Bank of England (BofE) are currently operating a digital securities sandbox to explore the use of tokenised securities and establish a permanent regulatory regime for trading and settlement.
READ MORE: ICMA responds to digital securities sandbox proposals
Surath Sengupta, head of transaction banking products at Lloyds, commented, “Tokenisation allows us to bring real-world assets onto blockchain infrastructure, creating opportunities for businesses to transact with greater speed, transparency, and flexibility. These advantages come without losing the benefits of traditional cash, as tokenised deposits can continue to earn interest and remain protected by the Financial Services Compensation Scheme.”
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