Monument to tokenise retail deposits on Midnight blockchain

Monument will tokenise retail customer deposits on the Midnight blockchain, making it the first UK bank to do so for retail deposits.

The initial phase covers up to £250 million of deposits, with each digital token representing funds held at the bank on a one-to-one basis. The deposits will remain redeemable in pounds sterling and continue to be covered by existing Financial Services Compensation Scheme protection.

Monument, a UK digital bank with more than 100,000 customers, said the deposits will keep generating interest in the same way as traditional savings balances. The bank manages about £7 billion in deposits, and the tokenised version is aimed at its mass-affluent customer base.

The project uses infrastructure developed by the Midnight Foundation. Transaction data on the network will be visible only to the bank and its customers, reflecting the privacy requirements of regulated financial services.

Three phases

The rollout is structured in three stages. First, Monument plans to bring up to £250 million of customer deposits onto the network in tokenised form while keeping them within the current regulatory framework.

In the second stage, the bank plans to offer tokenised investment products through its app, including real-world asset investments managed by global asset managers. Customers would not need to buy or manage digital assets directly, as the blockchain layer would operate in the background within the bank's existing environment.

The third stage would introduce Lombard-style lending through the app, allowing customers to borrow against investments rather than sell them. This type of borrowing has typically been associated with private banking clients.

Monument Technology, an affiliate of Monument Bank, will also seek to make tokenised deposit functionality available to other institutions through its banking platform.

Market shift

Banks and asset managers have been testing tokenised forms of money and securities as they explore faster settlement, collateral use and new ways to distribute financial products. Monument's approach differs from many earlier efforts by focusing on retail customers rather than institutional users.

The wider market has drawn increasing attention. Research from Boston Consulting Group, cited by the companies, estimated that tokenised financial assets could reach USD $4 trillion to USD $16 trillion by 2030.

The initiative comes as regulators and financial institutions examine whether tokenised deposits can preserve the legal and consumer protections of bank money while adding some of the operational features associated with blockchain networks. Monument said its model keeps the deposit relationship with the bank intact rather than creating a separate asset.

Founder Mintoo Bhandari said the launch reflects the bank's original mission. "Monument was founded on the promise of bringing the most innovative and valuable financial offerings, safely and securely, to the often overlooked and underserved mass-affluent community in the UK and beyond. The step we are taking today with the Midnight Foundation demonstrates how we continue to deliver on that promise," he said.

"We are confident that Midnight can provide Monument and its clients with the blockchain infrastructure required to preserve the confidentiality that will be essential to the future of highly efficient, scalable, modern banking," Bhandari added.

Chief Executive Ian Rand said the bank sees the project as part of a broader service offering. "By combining these innovative capabilities with our exceptional client-centric service model, and the protections provided by the regulated banking framework of the UK, we are excited to deliver services that help our clients manage, and build, their prosperity," he said.

Fahmi Syed, President of the Midnight Foundation, said the technology is designed to address a longstanding challenge. "Financial institutions around the world are exploring how blockchain infrastructure can support regulated financial products, but one of the persistent challenges has been balancing transparency with the privacy requirements of modern banking," the president said.

"Midnight provides programmable privacy infrastructure that allows financial institutions to represent assets on public networks while ensuring transaction data and sensitive financial information remain protected. Monument's initiative demonstrates how regulated banks can begin bringing traditional financial products onto a permissionless blockchain like Midnight in a way that aligns with existing compliance, disclosure and consumer protection frameworks," Syed added.

Daniel Fozzati, Founding Partner of The Building Blocks, whose firm worked on the partnership, said: "This partnership marks a key milestone in the maturation of blockchain technology, proving that next-generation technologies and the highest standards of regulatory compliance can work hand in hand to deliver outstanding customer experiences and value. The Building Blocks is delighted to have forged this partnership, delivering a world first by leveraging the UK's innovation ecosystem."