UK Aims to Lead Global Payments with Regulated Tokenized Sterling Pilot

UK Finance, the financial services trade association, has launched a pilot project to test tokenized sterling deposits (GBTD) in collaboration with six major UK banks: Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, and Santander. The initiative, set to run until mid-2026, aims to explore how digital representations of traditional commercial bank money can enhance payment efficiency, fraud prevention, and digital asset settlementUK banks press on with tokenised deposits after BoE stablecoin warning^[1]. The project builds on earlier phases of the UK Regulated Liability Network (RLN) and positions the UK as a leader in payments innovationUK banks launch industry pilot for tokenised sterling deposits^[2].

Tokenized deposits involve creating digital versions of fiat currency deposits using blockchain technology, enabling programmable payments while retaining the regulatory safeguards of conventional banking systemsUK banks press on with tokenised deposits after BoE stablecoin warning^[1]. The pilot will test three use cases: person-to-person payments via online marketplaces, remortgaging processes, and digital asset settlement. These applications are expected to improve transparency, reduce fraud, and streamline transactions, particularly in property conveyancing and cross-border settlementsUK banks launch industry pilot for tokenised sterling deposits^[2]. The project also introduces "tokenisation-as-a-service," allowing non-bank participants to engage with the platformUK banks press on with tokenised deposits after BoE stablecoin warning^[1].

Quant, a blockchain infrastructure provider, has been selected to deliver the underlying technology for the GBTD projectUS and UK crypto coordination could 'kick-start' British sector^[4]. The platform will ensure interoperability between tokenized deposits, existing payment systems (such as Faster Payments and RTGS), and blockchain networks. This infrastructure aims to enable seamless integration with the UK’s National Payments Vision and support government initiatives like the digital gilt (DIGIT) programUK banks launch industry pilot for tokenised sterling deposits^[2]. EY and Linklaters are also collaborating on the project, providing technical and legal expertiseUS and UK crypto coordination could 'kick-start' British sector^[4].

The initiative aligns with the Bank of England’s (BoE) cautious approach to stablecoins, which Governor Andrew Bailey has criticized for potentially destabilizing the banking system by diverting funds away from regulated institutionsUK banks press on with tokenised deposits after BoE stablecoin warning^[1]. Instead, the BoE encourages innovation in tokenization, which keeps payments within the banking framework while leveraging digital efficiency. Jana Mackintosh, UK Finance’s managing director, emphasized that tokenized deposits represent a "secure, regulated evolution of the payments landscape," echoing the BoE’s call for technological advancements in moneyUK banks press on with tokenised deposits after BoE stablecoin warning^[1].

Industry leaders have highlighted the strategic importance of the project. Barclays’ head of digital assets, Ryan Hayward, noted that tokenizing deposits ensures commercial bank money remains central to the economyUK banks launch industry pilot for tokenised sterling deposits^[2]. HSBC’s John O’Neil described the initiative as a "pivotal step in the UK’s financial evolution," while Santander’s Paul Horlock stressed the potential for "smart money" to enhance retail consumer confidence and flexibilityUK banks launch industry pilot for tokenised sterling deposits^[2]. The pilot also reflects broader efforts to address the UK’s lag in crypto adoption compared to the U.S., with analysts suggesting the project could "kick-start" Britain’s digital asset sector.

By mid-2026, the pilot aims to demonstrate tangible benefits, including faster transaction speeds, stronger fraud prevention, and greater user control over payments. If successful, the project could influence global standards for tokenized money and provide a blueprint for integrating digital finance into traditional banking systems. The UK’s collaboration with Quant, EY, and Linklaters underscores its ambition to lead in next-generation financial infrastructure while maintaining regulatory oversightUK banks press on with tokenised deposits after BoE stablecoin warning^[1].