Lloyds Bank and Archax Complete First Tokenised Gilt Deal

UK bank Lloyds and digital asset exchange and broker Archax used the Canton Network to complete what they say is the first transaction involving tokenised deposits to buy Gilts onchain, in a “global debut” for sterling deposits.

The bank issued tokenised deposits on the Canton Network which it used to buy tokenised gilts from the FCA-regulated digital asset exchange, broker, and custodian Archax, which then moved the funds back into its regular Lloyds account. “With the UK government exploring the possibility of issuing its own digital securities, this transaction demonstrates how tokenisation can bring traditional instruments such as Gilts into the digital ecosystem,” the bank says in a press release.

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

Lloyds and Archax ran a successful trial last year using units of a Tokenised Money Market Fund as collateral. The bank says tokenised deposits give businesses the ability to access a wider range of securities both off- and onchain, using the same cash asset. Instant settlement, automated agreements built into smart contracts and additional security and transparency are additional benefits, it adds.