UK Banks Push Tokenization Toward Real Infrastructure After Lloyds USDC Pilot
A government-industry effort is drafting governance, interoperability rules, pilot schedules to enable faster settlement ahead of planned digital bond and repo trials in early 2027.
Overview
- Lloyds’ latest survey found 71% of senior UK finance decision-makers expect tokenization to reshape financial services and 60% named faster payments and settlement as the top benefit.
- Lloyds ran a seven-day live trial with Visa that used USDC to settle about $750,000 in payment obligations, with funds reaching Visa in under an hour including transactions outside normal banking hours.
- Industry-wide interbank tests have moved beyond theory to practical scenarios, including two remortgage transfers involving Lloyds, NatWest and Barclays and a simulated marketplace payment involving HSBC and other banks.
- Banks, regulators and service firms are working to create a company, rulebook and governance framework while planning three digital bond issues in Q1 2027 and an end-to-end tokenized repo by spring 2027.
- Tokenization means creating ledger-based digital versions of cash and securities that can settle on blockchain systems; faster settlement could free liquidity and cut operational work but wider use hinges on common standards, legal clarity and regulatory approval.