Lloyds Banking Group collaborates on āUK-first use of digital assetsā
15 July 2025 UK
Image: Lubek/stock.adobe.com
Lloyds Banking Group, Aberdeen Investments, and Archax confirm the collaboration of their trading businesses, ālaying the foundationā for scaling tokenised collateral solutions.
The recent partnership works to advance the use of blockchain technology using tokenised real-world assets (RWAs) as collateral.
In a āUK-first initiativeā, tokenised units of Aberdeen Investmentās money market fund and tokenised UK gilts were used as collateral for foreign exchange trades with Lloyds.
The digital tokens were issued, transferred, and held by digital asset exchange Archax on the Hedera Hashgraph public permissioned blockchain.
According to Lloyds, the trade demonstrates that regulated digital assets can serve as collateral in this market, which it calls āa significant milestoneā.
Digital assets can be programmed to automatically follow the rules of trading agreements streamlining the margining process, reducing operational costs, enhancing collateral efficiency, and minimising counterparty risk, the firm adds.
Lloyds continues: āWider adoption of tokenised funds as collateral could also help reduce systemic risk during periods of market stress by enabling digital transfers instead of forced asset sales ā thereby reducing volatility.ā
Emily Smart, chief product officer at Aberdeen Investments, says: āTokenisation has long been seen as a key enabler in the new world of digital innovation.
āThatās why we are delighted to collaborate with Lloyds and Archax, to demonstrate real-world application of on-chain collateral movements using tokenised assets. This demonstrates the ability of digital assets to streamline processes and increase efficiency.ā
Peter Left, head of digital finance at Lloyds Banking Group, adds: āThis groundbreaking initiative proves that digital assets can be used in regulated financial markets under existing legal frameworks here in the UK.
āItās a major step forward in demonstrating how tokenisation can enhance collateral efficiency, reduce friction, and unlock new trading opportunities.ā
The recent partnership works to advance the use of blockchain technology using tokenised real-world assets (RWAs) as collateral.
In a āUK-first initiativeā, tokenised units of Aberdeen Investmentās money market fund and tokenised UK gilts were used as collateral for foreign exchange trades with Lloyds.
The digital tokens were issued, transferred, and held by digital asset exchange Archax on the Hedera Hashgraph public permissioned blockchain.
According to Lloyds, the trade demonstrates that regulated digital assets can serve as collateral in this market, which it calls āa significant milestoneā.
Digital assets can be programmed to automatically follow the rules of trading agreements streamlining the margining process, reducing operational costs, enhancing collateral efficiency, and minimising counterparty risk, the firm adds.
Lloyds continues: āWider adoption of tokenised funds as collateral could also help reduce systemic risk during periods of market stress by enabling digital transfers instead of forced asset sales ā thereby reducing volatility.ā
Emily Smart, chief product officer at Aberdeen Investments, says: āTokenisation has long been seen as a key enabler in the new world of digital innovation.
āThatās why we are delighted to collaborate with Lloyds and Archax, to demonstrate real-world application of on-chain collateral movements using tokenised assets. This demonstrates the ability of digital assets to streamline processes and increase efficiency.ā
Peter Left, head of digital finance at Lloyds Banking Group, adds: āThis groundbreaking initiative proves that digital assets can be used in regulated financial markets under existing legal frameworks here in the UK.
āItās a major step forward in demonstrating how tokenisation can enhance collateral efficiency, reduce friction, and unlock new trading opportunities.ā
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