Lloyds, Aberdeen and Archax Collaborate on Blockchain-Based FX Trading

Lloyds Banking Group and Aberdeen Investments have partnered with crypto exchange Archax to enable foreign-exchange contracts to be collateralized using digital assets. The partnership uses blockchain technology, allowing tokenized real-world assets to be used as collateral, potentially reducing trading costs. The UK's banks are experimenting with digital-asset offerings, with the government announcing new legislation covering the area.

Lloyds Banking Group Plc and fund manager Aberdeen Investments have joined forces with crypto exchange Archax to enable foreign-exchange contracts to be collateralized using digital assets. This strategic partnership leverages blockchain technology, allowing tokenized real-world assets to serve as collateral, potentially reducing trading costs. The collaboration marks a significant step forward in the UK's exploration of digital-asset offerings, with the government actively announcing new legislation in this area.

Under the initiative, digital tokens backed by UK gilts and units of Aberdeen Investment’s money market fund have been issued, transferred, and held by UK-based Archax. This use of blockchain technology enhances collateral efficiency and reduces friction in FX trading, according to Peter Left, head of digital finance at Lloyds. The UK trades approximately $5.4 trillion in FX and interest-rate derivatives daily, accounting for roughly half of global activity, making this a high-impact application of the technology [1].

The partnership reflects a broader trend among UK banks experimenting with digital-asset offerings. The UK’s regulatory environment, however, has been marked by a cautious approach to crypto, with many banks placing restrictions or bans on crypto transactions. Daniel Slutzkin, head of growth at Gemini UK, notes that this hesitancy stems from a legacy mindset and a lack of regulatory clarity [2].

Despite these challenges, the UK is poised to become a more competitive environment for crypto with the recent near-finalization of its crypto asset regulation draft by the HM Treasury. The proposed statutory instrument (SI) outlines a regulatory framework for staking and excludes “true” DeFi, aiming to foster innovation while maintaining regulatory oversight. Slutzkin believes that the UK's approach could provide a second-mover advantage over MiCA regulations, which have faced mixed results in the EU [2].

The UK's historical prominence in global finance, coupled with increasing consumer adoption of crypto, positions the country to lead in the next era of digital finance. As major financial institutions like BlackRock enter the crypto market, the UK's regulatory environment could see significant shifts, potentially attracting more global investment and innovation.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-14/lloyds-aberdeen-tie-up-with-crypto-bourse-archax-for-fx-trading
[2] https://www.ccn.com/news/crypto/uk-crypto-gemini-daniel-slutzkin/