Monument Bank delays retail tokenized deposits due to UK regulatory issues

Monument Bank, the UK challenger bank that made waves earlier this year with its plan to bring tokenized deposits to retail customers via a public blockchain, has delayed its rollout, citing regulatory complications in the United Kingdom.

The bank had positioned itself as a pioneer among UK-regulated institutions by announcing it would tokenize up to £250 million in customer deposits on the Midnight network. That plan is now on pause as the bank navigates what appears to be an evolving and uncertain regulatory landscape for blockchain-based banking products.

What Monument originally promised

Back in March 2026, Monument laid out an ambitious blueprint. The bank, which serves over 100,000 customers and holds approximately £7 billion in deposits, said it would begin mirroring retail savings balances on Midnight, a privacy-focused public blockchain that uses zero-knowledge proofs to keep transaction data visible only to the bank and its clients.

The pitch was compelling: tokenized deposits would remain fully backed 1:1 by pounds sterling, continue earning interest, and stay protected under the UK’s Financial Services Compensation Scheme. Customers wouldn’t need to touch a wallet or manage any digital assets directly. The blockchain infrastructure would operate under the hood, invisible to the end user.

Monument’s target demographic tells you a lot about the strategy. The bank was aiming squarely at mass-affluent clients, those with investable assets between £50,000 and £5 million, essentially betting that blockchain rails could become a selling point for wealthy customers who want innovation without the rough edges of crypto self-custody.

The phased rollout was supposed to start with savings balance tokenization, then expand into tokenized investment products and Lombard-style lending, where customers could borrow against their tokenized holdings within Monument’s app.

Why the delay matters

For Monument, the challenge is that tokenized deposits sit in an awkward middle ground. They’re not stablecoins in the traditional sense, since they’re issued by a regulated bank and backed by real deposits. But they live on a public blockchain, which introduces questions about custody, settlement finality, and how existing deposit protection rules apply when assets exist in tokenized form on distributed infrastructure.

The bank’s use of zero-knowledge proofs on Midnight was designed partly to solve the compliance puzzle, keeping sensitive customer data private while still allowing the bank to meet its regulatory obligations. But technology alone doesn’t resolve the ambiguity when the rulebook itself hasn’t caught up.

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