British lender Lloyds Banking Group is claiming bragging rights for having completed the UK's first gold leaf purchase using tokenized deposits, a blockchain representation of fiat bank deposits.
Lloyds, the country's third-largest bank by market capitalization, announced it has enlisted crypto trading platform Archax and privacy-focused Canton Network to buy government bonds. The bond name refers to old gold-rimmed securities.
The acquisition demonstrates how tokenization can transform traditional banking, turning real-world assets into digital formats that can be instantly bought, sold and transferred, Lloyds said in a press release.
The transaction involved the company's Lloyds Bank plc division issuing tokenized deposits on the Canton network. Lloyds Bank Corporate Markets then used the deposit to make tokenized gold leaf payments from Archax. Archax eventually returned the underlying assets to a regular Lloyd's account, the release said.
“This transaction offers a glimpse into a future of faster, smarter and more efficient finance,” Surath Sengupta, head of transaction banking products at Lloyds, said in a statement. “Tokenization allows real-world assets to be brought into blockchain infrastructure, creating opportunities for businesses to transact with greater speed, transparency, and flexibility.”
Sengupta pointed out that because tokenized deposits can continue to earn interest and remain in the Financial Services Compensation Scheme's Deposit Protection Program, these benefits, such as instant settlement, automatic contracting, and increased transparency and security, can be obtained without losing the benefits of traditional cash.
