UK Finance, the trade association representing over 300 financial institutions, announced the launch of a groundbreaking two-year pilot for tokenized sterling deposits GBTD.
This initiative involves six of the UK’s largest banks—Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, and Santander—and marks the country’s first live transactions using digital representations of traditional commercial bank money on blockchain infrastructure.
The pilot, running until mid-2026, is designed to test real-world applications while keeping funds within the regulated banking system, ensuring they retain the same protections as conventional deposits.
The project follows recent comments from Bank of England Governor Andrew Bailey, who in July 2025 urged banks to prioritize tokenization of deposits over issuing private stablecoins.
Bailey highlighted stablecoins’ potential risks to financial stability by pulling liquidity from banks, while emphasizing tokenized deposits as a “secure, regulated evolution” of payments. The BoE has confirmed that banks can experiment with this technology under existing regulations, even as the Financial Conduct Authority (FCA) finalizes stablecoin rules by late 2026.
This aligns with the UK’s broader ambitions, including the Digital Securities Sandbox, the National Payments Vision, and plans for a digital gilt (DIGIT) bond.
Blockchain firm Quant Network has been selected to provide the core payments infrastructure and “tokenization-as-a-service,” enabling interoperability across digital money forms and allowing smaller institutions to join without building their own systems.
Quant’s CEO, Gilbert Verdian, described it as “building the infrastructure powering tomorrow’s economy,” positioning the UK as a global leader in tokenized money standards. The pilot focuses on three main applications to demonstrate how tokenized deposits can enhance efficiency, security, and programmability.
These tests build on earlier experimentation by UK Finance and 11 banks in 2024 as part of the Regulated Liability Network (RLN), which explored programmable payments and fraud reduction.
Proponents argue that tokenization could make transactions faster, cheaper, and safer by leveraging blockchain for programmable features—like automated conditions—without disrupting the “singleness of money” (the principle that all pounds are interchangeable).
Jana Mackintosh, UK Finance’s managing director for payments and innovation, noted that it allows “innovation while keeping payments inside the regulated banking system.” HSBC’s Group Head of Digital Assets & Currencies, John O’Neill, added that it draws on the bank’s global experience to better serve clients.
This pilot comes amid accelerating global trends: the EU’s MiCA regulation fully in force since late 2024 excludes tokenized deposits from crypto rules, treating them as traditional banking products. In the UK, it could pave the way for wider adoption of tokenized assets and CBDCs, maintaining commercial bank money’s central role in the economy.
Tokenized deposits on blockchain infrastructure enable near-instantaneous settlements, reducing delays in processes like remortgaging currently weeks-long and wholesale bond trading. Programmable payments—where conditions like escrow or automatic transfers are coded into transactions—could lower costs by minimizing intermediaries.
Blockchain’s immutable ledger reduces fraud risks in online marketplaces and property conveyancing by ensuring transparent, tamper-proof records. This could boost consumer and business confidence in digital transactions.
Quant’s infrastructure enables seamless integration across banks and digital asset platforms, potentially standardizing tokenized money across the UK and beyond. This could streamline cross-border payments and support global trade in tokenized assets.
By prioritizing tokenized deposits over private stablecoins, banks retain control over money creation and circulation, countering the risk of liquidity drainage to unregulated crypto platforms. This aligns with Bank of England Governor Andrew Bailey’s concerns about stablecoins undermining financial stability.
Tokenization opens opportunities for banks to offer innovative services, such as programmable payment solutions or tokenized asset custody, potentially offsetting declining margins in traditional banking.
The Bank of England’s confirmation that tokenized deposits fall under existing regulations provides a clear path for innovation without immediate need for new laws. This contrasts with the FCA’s ongoing stablecoin framework, expected by late 2026, and positions tokenized deposits as a lower-risk alternative.
The pilot aligns with the UK’s Digital Securities Sandbox, National Payments Vision, and plans for a digital gilt (DIGIT). Success could accelerate these initiatives, positioning the UK as a global leader in regulated digital finance.
By setting standards for tokenized commercial bank money, the UK could influence international norms, especially as the EU’s MiCA framework fully in force since late 2024 similarly excludes tokenized deposits from crypto regulations. This could drive harmonization in global financial systems.
The use of blockchain for regulated deposits signals broader acceptance of distributed ledger technology (DLT) in mainstream finance, potentially spurring investment in DLT infrastructure and talent. The pilot’s focus on wholesale bond settlement supports the growth of tokenized securities markets, enabling seamless integration of digital money and assets.
Faster mortgage settlements and secure online marketplace transactions could enhance convenience for consumers and small businesses, reducing costs and risks in high-value transactions. Businesses could leverage programmable payments for automated supply chain financing or conditional payouts.
A successful pilot could strengthen London’s position as a global financial center, attracting fintech investment and talent amid competition from the EU, US, and Asia. With other jurisdictions like the EU and Singapore exploring similar technologies, the UK’s early mover advantage could set benchmarks for tokenized money, influencing cross-border standards and adoption.
The pilot’s success hinges on scaling from six major banks to broader participation, including smaller institutions and international partners, which may face technical and cost barriers. While Quant’s platform aims for seamless integration, ensuring compatibility across diverse blockchain protocols and legacy systems remains complex.
The UK’s tokenized deposits pilot is a pivotal step toward digitizing finance while preserving regulatory oversight and bank centrality. It promises efficiency gains, fraud reduction, and new financial products but requires overcoming technical and adoption challenges.
By aligning with global trends—like the EU’s MiCA and rising tokenized asset markets—the UK could cement its leadership in regulated digital finance, influencing how money evolves globally. The pilot’s outcomes by mid-2026 will be critical in shaping these implications.
