Monument Bank set to tokenize £250 million of retail deposits in a UK first.

The deposits will continue to earn interest, be fully secured, and safeguarded by the nation’s Financial Services Compensation Scheme.

(Eduardo Soares/Unsplash)

What to know:

• Monument Bank, a challenger bank in the U.K., intends to tokenize as much as 250 million pounds ($335 million) of retail customer deposits on the Midnight network, a public blockchain.
• The deposits will continue to earn interest, be fully supported, and safeguarded by the U.K.’s Financial Services Compensation Scheme.
• This initiative could set a precedent for other organizations to implement similar tokenized deposit frameworks through Monument’s Banking-as-a-Service platform.

Monument Bank announced its plan to tokenize up to 250 million pounds ($335 million) of retail customer deposits on the Midnight network, marking the first such initiative by a U.K.-regulated bank utilizing a public blockchain.

The challenger bank, based in London, confirmed that the deposits will remain interest-bearing, fully secured by Monument, and redeemable on a one-for-one basis in pounds sterling. Additionally, they will still be protected by the U.K.’s Financial Services Compensation Scheme.

This initiative represents a significant step towards integrating tokenized financial products within regulated banking. While banks in the U.K. and other regions have investigated tokenized deposits, most efforts thus far have concentrated on institutional applications or closed systems.

Monument is targeting this initiative at retail clients, beginning with individuals possessing investable assets ranging from 50,000 pounds to 5 million pounds, referred to as the mass-affluent, according to asset management firm St. James’s Place.

Monument, which claims to have over 100,000 customers and approximately 7 billion pounds in deposits, stated that the initial phase will replicate savings balances on Midnight’s privacy-oriented blockchain.

Subsequent phases are intended to incorporate tokenized investment offerings such as private market and commodity funds, followed by lending options against those assets within the Monument application.

The Midnight Foundation, created by Shielded Technologies, a firm associated with Cardano creator Input Output, is supplying the blockchain infrastructure.

Monument indicated that the system is structured to ensure that transaction data is only visible to the bank and its customers, while remaining compliant with existing U.K. banking regulations and protections.

The announcement also signals a broader strategy. Monument revealed that its affiliate, Monument Technology, aims to provide tokenized deposit features through its Banking-as-a-Service platform, potentially enabling other institutions to adopt this model.