British lender Lloyds Banking Group is claiming bragging rights for completing the first UK gold purchase using tokenized deposits, or blockchain representations of bank deposits in fiat currency.
Lloyds, the country’s third-largest bank by market capitalization, said it enlisted the help of crypto-trading platform Archax and privacy-focused Canton Network to buy the sovereign debt. The bonds’ name refers to the old gold-edged certificates.
The acquisition illustrates how tokenization can transform traditional banking, turning real-world assets into digital forms that can be bought, sold or transferred instantly, Lloyds said in a press release.
The transaction involved the company’s Lloyds Bank plc unit issuing tokenized deposits on the Canton Network. Lloyds Bank Corporate Markets then used the deposits to pay for a tokenized gold from Archax. Finally, Archax moved the underlying funds back into its regular Lloyds account, the release said.
“This transaction offers a glimpse into the future of finance; faster, smarter and more efficient,” Surath Sengupta, head of transaction banking products at Lloyds, said in a statement. “Tokenization allows us to bring real-world assets into the blockchain infrastructure, creating opportunities for businesses to transact with greater speed, transparency and flexibility.”
Sengupta pointed out that tokenized deposits can continue to earn interest and remain in the Financial Services Compensation Scheme deposit protection program, so these benefits – instant settlement, automated deals, improved transparency and security – come without losing the benefits of traditional cash.
