Quant Executive Says Cross-Border Tokenized Deposits Need Shared Rules

At a UK Finance conference in London on Monday, Oct. 19, Quant Chief Product Officer for Financial Services Martin Hargreaves argued that cross-border links for tokenized bank deposits will need shared operating rules. The panel also discussed how banks could settle transactions with one another.

Hargreaves argued that compatible standards, rulebooks and participation across multiple networks are needed to create commercial corridors. Those links would require institutions to connect across systems and a way to resolve payment obligations between banks. The British and Japanese projects discussed remain domestic in scope. Tokenized deposits are digital forms of commercial bank money that support programmable payments while retaining conventional deposit protections.

Britain’s Great British Tokenised Deposit (GBTD) initiative completed its first live retail customer transactions in September. The seven-bank initiative involves Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest and Santander. Its transactions included two remortgage completions and a marketplace purchase from a private seller.

In Japan, a proof-of-concept project supported by Japan’s Financial Services Agency (FSA), the country’s financial regulator, is set to assess settlement for tokenized-deposit transfers through interbank accounts or stablecoins. The project is also set to examine related legal issues. Its applicants include DeCurret DCP, GMO Aozora Net Bank and Abeam Consulting, with Hokuriku Bank participating.

The conference panel focused on institutional money and next-generation deposits. It included Hargreaves, Lloyds Banking Group’s Peter Left, DeCurret DCP’s Mai Kaneko and DZ Bank’s Claus George. Kaneko proposed shared identity and compliance functions, including know-your-customer and anti-money-laundering checks, with zero-knowledge proofs as a potential privacy tool. Panelists also raised payment-versus-payment smart contracts as a possible link between national systems.

The Japanese proof of concept is set to assess two settlement approaches while examining legal questions. The British transactions and Japanese project describe domestic activity; the conference discussion addressed how future cross-border connections might work.