Lloyds Banking Group, Aberdeen Investments and digital asset exchange Archax have completed what they describe as a UK-first transaction using tokenised real-world assets as collateral in a foreign exchange trade.
The pilot involved units of Aberdeen’s tokenised money market fund and tokenised UK gilts, issued on the Hedera Hashgraph public permissioned blockchain. Archax acted as issuer and custodian of the digital tokens, which were used as collateral for FX trades between Aberdeen and Lloyds.
“This groundbreaking initiative proves that digital assets can be used in regulated financial markets under existing legal frameworks here in the UK,” said Peter Left, head of digital finance at Lloyds Banking Group. “It’s a major step forward in demonstrating how tokenisation can enhance collateral efficiency, reduce friction, and unlock new trading opportunities.”
According to the Bank for International Settlements, the UK accounts for approximately $5.4trn in daily FX and interest rate derivatives trading—half the global total. The use of tokenised assets as collateral could materially improve post-trade workflows.
Emily Smart, chief product officer at Aberdeen Investments, said: “Tokenisation has long been seen as a key enabler in the new world of digital innovation. That’s why we are delighted to collaborate with Lloyds and Archax, to demonstrate real-world application of on-chain collateral movements using tokenised assets.”
Programmability of these assets can automate trading agreement rules, streamline margining, and reduce operational costs and counterparty risk. Tokenised fund units may also offer advantages during periods of market stress, allowing for digital transfers in place of asset sales to meet margin calls.
Archax co-founder and CEO Graham Rodford highlighted the role of the firm’s Nest network, which enabled the transfer.
“This latest use-case for Nest, our permissioned DeFi collateral transfer network, highlights the power of regulated digital infrastructure to support institutional-grade needs,” Rodford said. “This has established another key digital milestone in the foundation for a more open and efficient financial system.”
The pilot marks another demonstration of regulated digital asset technology integrated into traditional finance workflows, with participants signalling their intent to scale the solution across broader use cases.
