CoinDesk
Monument Bank's plan to tokenize £250 million ($330 million) of UK retail deposits on the privacy-focused Midnight blockchain is several months behind schedule after the bank failed to find a local custodian that met Financial Conduct Authority standards and could handle zero-knowledge proofs. Founder Mintoo Bhandari said the bank now expects to roll out the deposits by November, after finding an FCA-approved custodian in Canada. The deposits are intended to remain interest-bearing, fully backed by Monument, redeemable one-for-one in pounds sterling and covered by Financial Services Compensation Scheme protection up to £120,000 per person or company.
Why it matters
The project would put interest-bearing retail deposits on a public blockchain, extending tokenized deposits beyond institutional customers and closed networks. Monument is targeting mass-affluent clients with £50,000 to £5 million in investable assets through a regulated app offering tokenized private equity, structured products and automated Lombard lending.
Midnight uses zero-knowledge proofs to keep customer information within Monument's systems while allowing the bank to prove onchain compliance and provide regulators with records for audits. The delay shows that retail tokenization depends on custody and compliance infrastructure as much as on the blockchain itself.
Market impact
The Canadian custodian is intended to address the immediate bottleneck, but its identity has not been disclosed. The November rollout will test whether a public-chain deposit model can meet UK regulatory requirements while preserving the protections customers expect from bank deposits.
Monument says the deposits will remain redeemable one-for-one and covered by FSCS protection. The design preserves key bank-deposit features while the delay highlights the operational burden of privacy-preserving compliance.
Frequently asked questions
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What custody problem delayed Monument's retail tokenized deposits?
Monument could not find a local crypto custodian that met FCA standards and handled zero-knowledge privacy proofs. It expanded the search internationally and found an FCA-approved custodian in Canada.
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When does Monument expect to launch the tokenized deposits?
Monument now expects to roll out the retail tokenized deposits by November, following the Canadian custody arrangement.
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How would Midnight's zero-knowledge proofs support FCA oversight?
The proofs are intended to keep customer information within Monument's systems while letting the bank prove onchain compliance and provide regulators with records for audits.
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What protections will Monument's tokenized deposits retain?
The deposits are intended to remain interest-bearing, fully backed by Monument, redeemable one-for-one in pounds sterling and covered by FSCS protection up to £120,000 per person or company.
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Which customers is Monument targeting with the project?
The initial target is mass-affluent clients with £50,000 to £5 million in investable assets. The regulated app is intended to offer tokenized private equity, structured products and automated Lombard lending.
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