Lloyds Bank Executes First UK Gilt Purchase via Tokenized Deposits on Canton Network

The Lead

Lloyds Bank has completed the UK’s first purchase of a government bond (gilt) using tokenized deposits on a public blockchain. In a statement released Wednesday, the banking giant confirmed it issued the digital cash on the Canton Network to settle a transaction with digital asset exchange Archax.

The move signals a shift in institutional strategy: moving beyond private, siloed ledgers to privacy-enabled public networks. Unlike previous pilots restricted to internal systems, this transaction settled on Canton, a network designed to interconnect regulated financial markets while preserving data privacy.

The Mechanics

The transaction flow replaced traditional T+2 settlement cycles with near-instant execution:

• Issuance: Lloyds Bank plc minted tokenized deposits representing British Pounds.
• Execution: Lloyds Bank Corporate Markets used these tokens to purchase a tokenized gilt held by Archax.
• Redemption: Archax moved the proceeds back into its standard fiat account at Lloyds.

Crucially, the tokenized deposits retained Financial Services Compensation Scheme (FSCS) protection and continued to accrue interest. This legal wrapping solves a primary hurdle for corporate treasurers. Treating on-chain cash as equivalent to a bank balance rather than a risky bearer asset.

“Unlike private ledgers, the Canton Network opens up an opportunity for mass adoption… while preserving confidentiality.” , Lloyds Banking Group Statement

Institutional Context

This is not an isolated experiment. The UK banking sector is aggressively re-platforming backend infrastructure to accommodate tokenized assets.

On the same day, Barclays announced a strategic investment in Ubyx, a US-based clearing network for tokenized deposits. The Barclays capital injection aims to build a “common settlement framework” that allows tokenized money to move seamlessly between issuers, a direct competitor to the siloed “walled gardens” of early blockchain pilots.

The convergence is clear. Lloyds is testing the plumbing for asset purchase. Barclays is funding the rails for inter-bank settlement. Both are targeting the same endpoint: a market where Gilts, bonds, and cash settle atomically on-chain, bypassing legacy clearinghouses.