U.K.-based Monument Bank is launching a solution to tokenize retail deposits on the public blockchain network Midnight. The project is the first of its kind among regulated banks in the United Kingdom.
British digital challenger bank Monument Bank, which manages £7 billion ($9.27 billion) in deposits, announced a partnership with the Midnight Foundation, the developer behind the Midnight blockchain. As part of this collaboration, the bank plans to tokenize £250 million (~$330 million) in deposits. These funds will remain fully backed, redeemable in pounds sterling, and protected by the Financial Services Compensation Scheme (FSCS), the U.K.’s state-backed deposit protection fund.
Each digital token will correspond to one pound held in a bank account and will represent a digital form of a traditional interest-bearing deposit, rather than a separate financial instrument. Monument Bank customers will be able to hold these assets within blockchain infrastructure while continuing to earn interest.
The solution is built on the Midnight blockchain, a Cardano sidechain known for its high level of privacy. Transaction data will be accessible only to the bank and the customer, enabling the use of a public blockchain without exposing sensitive information and while remaining compliant with regulatory requirements.
The project will be implemented in three stages:
- Tokenization of deposits.
- Launch of investment products based on tokenized real-world assets, including private equity, commodity funds, and structured instruments, accessible via the bank’s app without requiring direct interaction with crypto-assets.
- Introduction of lending against investment portfolios, allowing customers to access liquidity without selling their assets.
According to Mintoo Bhandari, Founder of Monument Bank, the new service is aimed at affluent retail clients and is designed to expand access to investment products that were previously available mainly to institutional and high-net-worth investors. Analysts forecast that the volume of tokenized financial assets could reach $30 trillion by 2030.
Ian Rand, CEO of Monument Bank, also noted that the bank plans to integrate deposit tokenization functionality into its Banking-as-a-Service platform, making it available to other financial institutions.
Recently, BitGo and ZKsync also launched a regulated banking infrastructure for deposit tokenization based on the Prividium blockchain.
