Monument Bank Plans $335M Deposit Tokenization on Blockchain

Monument Bank plans £250M deposits tokenization on blockchain, keeping funds interest-bearing, fully backed, and protected under UK FSCS rules.

Monument Bank announced a plan to tokenize customer deposits using blockchain technology. The London-based bank wants to transfer $335 million worth of pounds, or approximately $250 million, onto a public network. This step would make Monument the first regulated UK bank to tokenize retail deposits. The project will utilise digital tokens while maintaining normal banking protections.

First UK Retail Deposit Tokenization Built on Public Blockchain

The savings of customers will be converted into blockchain-based tokens, the bank said. However, the deposits will remain 100% backed by the bank at all times. Customers will continue to be able to exchange their money 1 for 1 in pounds sterling. Due to this rule, the tokens will function like normal savings accounts.

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The funds will also continue to be protected under the UK Financial Services Compensation Scheme. This program normally covers deposits of up to GBP85,000 for each customer. Therefore, users will have the same safety level even after tokenization. This protection is important for trust in new technology, Monument said.

The system will run on the Midnight blockchain network. This network is privacy and security-oriented data sharing. Transaction details will remain hidden from the public and will be seen only by approved parties. Because of this design, the bank can use blockchain without violating financial rules.

Monument explained it will be about 250 million pounds of deposits during the first phase. Later phases may include more products or services. The bank believes tokenization can make finance faster and more flexible. As a result, more customers were able to use digital tools as part of their day-to-day banking.

The bank currently has a total deposit of around GBP7bn. Even though the first step is small, the plan is part of a bigger plan. Over time, Monument is interested in bringing more financial products onto the blockchain. This may include private equity, structured products and new lending models.

Tokenization May Expand Access to More Investment Products

Most large banks have tested blockchain in the past, but mainly for institutions. Companies such as HSBC, Lloyds, and JPMorgan worked on closed networks. Monument’s project is different, because it deals with retail customers. Therefore, the move could help bring blockchain to the average banking user.

Tokenization enables assets to be converted into digital tokens on a ledger. These tokens can be easily moved around and are easy to track. Because of this feature, banks will be able to construct new services at a reduced cost. Faster settlement and better record keeping are key benefits of the system.

The partnership with Midnight also demonstrates the use of privacy in conjunction with blockchain. Financial companies have to abide by strict rules about customer data. Using a network designed with privacy in mind, Monument is able to keep information safe. At the same time, the bank can also use modern technology.

In the future, the bank plans to add more tokenized investment options. Commodities funds and structured products may be offered on the same system. These products were typically restricted to the rich before. With tokenization, more people may be able to get access to them.

Monument said the goal is the creation of a system of financial architecture that is flexible and programmable. Blockchain can help bridge the gap between conventional banking and virtual markets. If the project works, other banks may go down the same route. For now, the plan demonstrates how regulated finance is only slowly moving on-chain.