Lloyds Bank, Archax & Canton Network Smash UK Barrier With First Tokenised Gilt Purchase

Forget waiting days for settlement. The UK's financial plumbing just got a blockchain-powered upgrade.

Lloyds Bank, digital asset exchange Archax, and the Canton Network have executed what they're calling the nation's first gilt purchase using tokenised deposits. No intermediaries. No legacy rails. Just a direct, atomic swap on a permissioned blockchain.

The Mechanics: How Tokenisation Cuts the Fat

Here's the play-by-play. Lloyds minted a digital representation of sterling deposits—a tokenised deposit. Archax, acting as the buyer, used these tokens to purchase a tokenised UK government bond (a gilt) directly on the Canton Network. Settlement was instantaneous. The trade self-executed, bypassing the traditional, multi-day choreography of custodians, clearing houses, and correspondent banks.

Why This Isn't Just a Tech Demo

This moves distributed ledger technology (DLT) from the innovation lab into a live, regulated transaction for a core sovereign debt instrument. It demonstrates a viable path for 24/7 capital markets and unlocks liquidity trapped in siloed systems. For institutions, it's a tantalising glimpse of reduced counterparty risk and operational cost.

The finance jab? A system originally built for quill pens finally gets a cryptographic signature—only about 300 years later than optimal.

The real test comes next: scale. Can this model handle the tidal wave of daily gilt trading? The proof won't be in the whitepaper, but in the throughput.

How the Transaction Worked

The transaction involved Lloyds Bank PLC issuing tokenised deposits directly on the Canton Network, a privacy-enabled public blockchain designed for regulated financial markets. Lloyds Bank Corporate Markets then used those tokenised deposits to purchase a tokenised UK Gilt issued by Archax.

Following the trade, Archax moved the underlying funds back into its standard Lloyds bank account, illustrating seamless interoperability between blockchain-based infrastructure and traditional banking systems. The end-to-end FLOW showed that digital assets can be transacted on-chain without disrupting existing cash management or custody frameworks.

Canton’s public-but-private design was key to the transaction. Unlike private ledgers, the network enables broader industry participation while preserving confidentiality and compliance — a critical requirement for institutional adoption.

Bringing Gilts Into the Digital Space

The Gilt purchase comes as the UK government explores issuing digital versions of traditional securities. The transaction provides a real-world example of how tokenisation could support that ambition, bringing sovereign instruments such as Gilts into a programmable blockchain-based environment.

By allowing instant settlement and atomic transactions, tokenisation reduces counterparty risk, improves liquidity, and shortens settlement cycles — long-standing inefficiencies in traditional capital markets.

Why Tokenised Deposits Matter for Businesses

Tokenised deposits allow businesses to MOVE money on blockchain networks while retaining the familiar characteristics of bank deposits, including interest accrual and regulatory protections. Using a single cash instrument, firms can access and trade a wider range of assets across both traditional and on-chain markets.

Other benefits include real-time settlement, smart contract automation to reduce operational risk, and enhanced transparency through distributed ledger records.

As part of the transaction Lloyds said it also operated its own validator node on the Canton Network, ensuring transactions met the same security and governance standards applied to conventional deposits.

Building Toward the Future of Finance

The transaction builds on Lloyds’ prior digital asset work with Archax, including the use of tokenised money market fund units as collateral. According to Lloyds, tokenisation offers a path to faster, smarter, and more efficient financial markets without sacrificing the safeguards of traditional banking.

Archax CEO Graham Rodford said the trade shows how tokenised real-world assets can deliver tangible benefits, describing instant settlement and enhanced transparency as “game-changers” for institutional markets.

Taken together, the pilot represents a critical step toward a hybrid financial system — one where regulated digital money and tokenised assets coexist seamlessly with traditional banking infrastructure.