Laying down the foundation for scaling tokenised collateral solutions in the UK, major British bank Lloyds Banking Group (Lloyds), investment management platform Aberdeen Investments, and digital asset exchange Archax, have announced a new collaboration of their trading businesses to use blockchain tech and tokenised real-world assets (RWAs) as collateral.
The UK trades $5.4trillion in foreign exchange (FX) and interest rate derivatives daily, accounting for half of global activity. To see the viability of digital assets in the space, tokenised units of Aberdeen Investment’s money market fund (tMMF) and tokenised UK gilts were used as collateral for FX trades between Aberdeen and Lloyds. These digital tokens were issued, transferred, and securely held by Archax on the Hedera Hashgraph public permissioned blockchain.
This trade demonstrates that regulated digital assets can serve as collateral in this market, which is a significant milestone. They 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.
Emily Smart, chief product officer, Aberdeen Investments, says: “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. This demonstrates the ability of digital assets to streamline processes and increase efficiency.”
Only the beginning
Wider 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—thereby reducing volatility.
Peter Left, head of digital finance at Lloyds Banking Group, said: “This groundbreaking initiative proves that digital assets can be used in regulated financial markets under existing legal frameworks here in the UK. It’s a major step forward in demonstrating how tokenisation can enhance collateral efficiency, reduce friction, and unlock new trading opportunities.”
Graham Rodford, CEO and co-founder of Archax, adds: “This latest use-case for Nest, our permissioned DeFi collateral transfer network, highlights the power of regulated digital infrastructure to support institutional-grade needs. We’re excited to be partnering with Lloyds and Aberdeen on this initiative and look forward to scaling the use of tokenised RWAs as transferable collateral. This has established another key digital milestone in the foundation for a more open and efficient financial system.”
