Britain’s largest banks have completed the first interbank transactions using tokenized deposits, a blockchain-based version of ordinary bank money. Lloyds Banking Group, NatWest, and Barclays settled two remortgage transactions, while a group of lenders including HSBC ran a simulated online marketplace purchase with funds released only after delivery was confirmed. The trials, run under UK Finance’s Great British Tokenised Deposit (GBTD) project, mark the moment bank-issued on-chain money moved from single-bank experiments to money that can travel between institutions.
- Lloyds, NatWest, and Barclays completed two remortgage transactions using tokenized deposits, with locked funds released automatically once the property transfer completed.
- HSBC and two other lenders ran a person-to-person test simulating an online marketplace purchase, using programmable deposits as built-in escrow. No real goods changed hands.
- Tokenized deposits carry the same legal status as money in a bank account, which is why the Bank of England prefers them over privately issued stablecoins.
- The project now plans to set up a company and a governing rulebook, with three digital bonds settled in tokenized deposits targeted for the first quarter of 2027.
- For crypto, the key question is whether bank money captures settlement volume that stablecoins might otherwise have won, or becomes the trusted cash leg for tokenized securities.
What Actually Happened in the Trials
For more than a decade, banks have explored putting deposits, bonds, and other assets on blockchains inside their own IT systems. The problem was that each lender built its own network, so tokens could not move from one bank to another. The GBTD transactions were designed to solve that gap by proving that deposits from different banks can travel across separate systems and settle automatically.
Two Remortgage Settlements
Lloyds, NatWest, and Barclays carried out two remortgage transactions, according to UK Finance. In each case, the funds were locked and then released automatically once the property transaction was recorded as complete. This removes a manual step that today typically requires coordination between conveyancers, lenders, and payment systems.
A Simulated Marketplace Purchase
Separately, three banks including HSBC ran a person-to-person payment that mimicked an online marketplace sale. Programmable deposits set aside the buyer’s money and released it to the seller only once the goods were confirmed as received. While the money genuinely moved between accounts, the goods were simulated. Jana Mackintosh, UK Finance’s managing director for payments and innovation, said the setup showed how the technology could lower fraud risk.
| Trial | Participating banks | What was tested | Outcome |
|---|---|---|---|
| Remortgage settlement (two transactions) | Lloyds Banking Group, NatWest, Barclays | Locked funds released automatically on completion of the property transaction | Completed between separate banks |
| Simulated online marketplace purchase | HSBC plus two other lenders | Programmable deposits holding buyer funds until delivery was confirmed | Money moved; no real goods exchanged |
Source: UK Finance, as reported by Reuters (September 2026).
The wider GBTD pilot, launched the previous year, involves Barclays, HSBC, Lloyds, Monzo, NatWest, Nationwide, and Santander, with Quant, EY, and Linklaters supporting the project. The marketplace test ran on technology from Quant Network. The pilot’s stated scope covers marketplace payments, remortgaging, and digital asset settlement.
Tokenised Deposits vs. Stablecoins: What Is Actually Different
The two instruments can look similar on a blockchain, but they represent different kinds of money. A tokenized deposit is an ordinary commercial bank deposit represented as a token. The liability stays on the bank’s balance sheet, and the deposit keeps the same legal status and protections as money already sitting in an account. The technology changes how the deposit moves, not what it is.
A stablecoin is a separate liability issued by a private company and backed by reserve assets, typically pegged to the US dollar or another currency. Because stablecoins sit outside the banking system, regulators have raised concerns about the cost of credit and monetary sovereignty when money leaves bank deposits. The Bank for International Settlements has argued that tokenized deposits fit better with the existing two-tier system of central bank money and commercial bank money.
| Feature | Tokenized deposit | Stablecoin |
|---|---|---|
| Issuer | Regulated commercial bank | Typically a private company |
| Legal nature | Same as a deposit in a bank account | Separate liability backed by reserves |
| Where the money sits | On the bank’s balance sheet | Outside the banking system |
| Programmability | Yes, as shown in the escrow-style trial | Yes, on public blockchains |
| Bank of England view | Preferred route for bank innovation | Governor has warned of risks |
Source: Descriptions drawn from UK Finance and Bank of England statements as reported by Reuters and Cryptopolitan.
Why the Bank of England Is Backing Bank Money On-Chain
The trials land in a policy environment that already leans toward bank-issued tokens. The Bank of England has said it would rather banks innovate with tokenized deposits than issue stablecoins. Governor Andrew Bailey has warned that bank-issued stablecoins could destabilize the financial system, and he has described tokenization as a way to modernize existing money rather than replace it.
“We are now working with the banks to design and implement the introduction of so-called tokenised money.”
— Andrew Bailey, Governor of the Bank of England, in a speech reported by Cryptopolitan
That does not mean stablecoins are shut out entirely. Deputy Governor Sarah Breeden has described a “multi-money” system in which traditional deposits, tokenized deposits, and regulated systemic stablecoins coexist and convert at par. The GBTD project is best read as the banks staking their claim to the regulated core of that system.
UK Finance says the work is also drawing attention from abroad, particularly in Europe.
“In the last 12 months, other jurisdictions have been speaking to us in earnest about what we’ve done, trying to understand how they can now catch up.”
— Jana Mackintosh, Managing Director for Payments and Innovation, UK Finance, speaking to Reuters
What It Means for Crypto and Stablecoin Issuers
The immediate impact on crypto markets is limited. Interbank transfers are plumbing, and the trials ran inside permissioned bank systems rather than on public blockchains. Still, the strategic signal is hard to miss. Banks are building their own on-chain rails so they do not have to cede settlement business to stablecoin issuers such as Tether or Circle.
The prize is the cash leg of tokenized finance. When a tokenized bond or fund share changes hands, something has to settle the payment side. Stablecoins have filled that role in much of the crypto market so far. Tokenized deposits offer an alternative that regulators already understand and that carries deposit protections.
Industry forecasts suggest why the banks care. Citi Institute projects that tokenized financial assets could reach $5.5 trillion by 2030 in its base case, or $8.2 trillion in a bull case, compared with a $1.9 trillion stablecoin base case, according to figures reported by Cryptopolitan. These are projections rather than measured outcomes, but they show where analysts expect the bulk of on-chain value to sit.
Projected market size by 2030, US$ trillions, as reported by Cryptopolitan
Data: Source 1 · Projections are third-party estimates cited in press coverage, not measured outcomes. Base and bull cases refer to Citi Institute scenarios.
Check the figures
- tokenised financial assets ($5.5 trillion): “Citi Institute projects tokenised financial assets at $5.5 trillion by 2030 in its base case” Original
- bull case ($8.2 trillion): “and $8.2 trillion in its bull case” Original
- stablecoin base case ($1.9 trillion): “compared with a $1.9 trillion stablecoin base case” Original
If those estimates prove even roughly right, the settlement layer for tokenized assets could be several times the size of the stablecoin market. That is the volume tokenized deposits are positioned to capture. Cryptopolitan also cites McKinsey estimates that major global banks already move more than $4 trillion a year through tokenized-deposit infrastructure, while Binance Research put on-chain real-world assets at $34.18 billion as of mid-September 2026. In other words, banks bring scale, while the public-chain tokenized asset market remains comparatively small.
The UK is not alone. In the United States, The Clearing House announced an interbank tokenized deposit project in June, designed to link tokenized commercial bank money with existing rails such as RTP and CHIPS. Canada’s six largest banks are collaborating on a Canadian-dollar tokenized deposit rail, and Canada’s regulator OSFI has stated that the underlying technology does not change a product’s legal nature. The direction of travel across major jurisdictions favors bank money on-chain.
What Comes Next: A Rulebook, a Company, and Digital Bonds
UK Finance now plans to establish a company and develop a rulebook and governing framework to move the project from pilot to production. That step matters because interoperability between banks depends on shared rules for how tokens are issued, redeemed, and settled. Without it, the trials remain a proof of concept.
The next milestone is capital markets. Participating banks plan to issue three digital bonds in the first quarter of 2027 that can be traded and settled using tokenized deposits. This would test whether the same money that settled a remortgage can also handle clearing and settlement for securities. Whether the UK’s head start holds depends on how quickly the rulebook and the 2027 issuance actually materialize.
Frequently Asked Questions
What is a tokenized deposit?
A tokenized deposit is a regular commercial bank deposit represented as a token on a blockchain or similar distributed ledger. It keeps the same legal status and protections as money in a bank account; only the way it moves changes.
Which UK banks took part in the first interbank transactions?
Lloyds Banking Group, NatWest, and Barclays completed two remortgage transactions. HSBC and two other lenders ran a simulated online marketplace purchase. The broader GBTD pilot also includes Monzo, Nationwide, and Santander.
Did real goods or property change hands?
Money moved between bank accounts in the trials, but the marketplace test involved no real goods. The remortgage transactions used automatic release of locked funds once the property transaction completed.
How do tokenized deposits differ from stablecoins?
Tokenized deposits are bank liabilities that stay on the bank’s balance sheet. Stablecoins are typically issued by private companies, backed by reserve assets, and sit outside the banking system, which regulators say raises credit and monetary sovereignty concerns.
When will tokenized deposits be used for digital bonds?
Participating banks plan to issue three digital bonds in the first quarter of 2027 that can be traded and settled with tokenized deposits.
Conclusion
The GBTD transactions are modest in size but significant in meaning. For the first time, tokenized bank money crossed institutional boundaries in the UK, settling real payments with rules built into the money itself. That is the missing piece that kept a decade of bank blockchain projects locked inside individual institutions.
For the crypto industry, the development sharpens a competitive question rather than settling it. Stablecoins remain the dominant on-chain settlement asset today, but banks now have a regulator-backed alternative that keeps money inside the deposit system. Whether that alternative displaces stablecoins or simply coexists with them will be decided by execution: the rulebook, the new company, and the digital bonds scheduled for early 2027.
