Monument Bank Delays Launch of Retail Tokenized Deposits Amid UK Regulatory Challenges

Monument Bank, a challenger bank based in the United Kingdom, has postponed its plans to offer tokenized retail deposits, citing regulatory hurdles within the UK. The bank had aimed to tokenize up to £250 million in customer deposits on the Midnight blockchain, a move that was intended to position it as a leader among UK-regulated financial institutions.

Originally announced in March 2026, Monument's initiative was designed to mirror retail savings balances on the Midnight network, utilizing privacy-focused technology to ensure transaction data remained confidential. The bank, which serves over 100,000 customers and manages approximately £7 billion in deposits, promised that these tokenized deposits would be fully backed by pounds sterling, continue to earn interest, and be protected under the UK’s Financial Services Compensation Scheme.

However, the regulatory landscape for blockchain-based banking products remains unclear, leading to the delay. Tokenized deposits occupy a complex space, as they are not traditional stablecoins but are issued by a regulated bank and backed by real deposits. This raises questions regarding custody and the application of existing deposit protection rules in a tokenized format. Monument's use of zero-knowledge proofs was intended to address compliance issues, but the evolving regulatory framework has created uncertainty that the bank must navigate before proceeding.

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Source: KLEA News