The Future of Banking: Tokenizing Deposits While Protecting Privacy

Traditional banking and public ledgers have faced the conflict between blockchain transparency as well as strict regulatory banking confidentiality.

The Monument Bank recently announced a partnership to become the first regulated bank in the UK to tokenize retail customer deposits on a public blockchain, and they are utilizing midnight a privacy enhancing 4th gen network built on.

Events zero knowledge groups joining us live here at the New York Stock Exchange to discuss what this means for the future of digital commerce is the president of the Midnight Foundation, Fahmi Syed.

Boy, great to have you here.

Thank you so much for joining me.

Thank you for having me.

So first, let's start out with this partnership for people who may not be as familiar.

Tell us what this means moving forward.

Yes, so we've seen blockchain adoption from institutions in terms of how they bring about assets on chain.

So for us when we think about blockchains, they are very public, very transparent, and for large businesses, large audiences, you've got to keep a secret.

And blockchain being public is just surveillance.

So with Monument Bank, a UK regulated neobank, one of the Growing banks in the UK regulated by the Bank of England, the PRA, they have agreed to come and build their solutions at Midnight, and they can do so on a permission network like Midnight but involve full privacy, full protection of metadata and data, so only Monument Bank and their clients get to see tokenization of their deposits.

And obviously I do want to ask you about Midnight's infrastructure because when we're talking about a financially regulated space, it is important to think about consumer privacy as well as protection.

So tell us a little bit more about the infrastructure.

Yes, so Midnight is a zero knowledge layer one.

It allows. applications, developers, corporations to fully protect their data and metadata because they never actually present any of it on chain.

It all sits behind their firewalls.

So with Monument Bank coming to Midnight, they are the regulated entity.

They are building a regulated solution on Midnight.

We provide the rails, like good infrastructure, we almost become visible to their clients.

And Fahmy, I do want to ask you about the tokenization of private markets.

So how does this work when we're talking about both compliance with infrastructure?

Yes, so with Midnight, we provide full privacy, so the Monument Bank or similar sort of partners can come and build, but we also offer selective disclosure through the smart contract.

That.

The contract layer could be both a public disclosure or a private disclosure, so it enables Monument Bank to make disclosures to their clients or to regulators, to their HR department, whichever is the relevant place, and nobody else gets to see that.

So we believe compliance solutions will enable large corporations to come to a network like Midnight and build out those tokenization solutions.

And of course I do want to ask you about volatility that we see in gas fees.

We know that when it comes to digital assets, 2026 so far has been quite volatile, but that's also true of other asset classes.

So what's going on when it comes to gas fees?

Yes, so if you think about how most blockchains work, you have to cannibalize the very capitalist asset you invested in.

So when Ethereum Solana prices go up.

What happens to the network?

The network becomes more expensive to build on, trade on, but also you can't predict that.

So with Midnight, once you have ownership of the crypto asset, the crypto token, it gives you perpetual free access to the network, and that free access allows both price and capacity predictability to builders and corporations.

And Fahmy, when I look back to the first half of 2026, since we're already heading into the second half of this year, I think about the times that you and I have met at different conferences, including consensus in Miami, as well as digital asset Summit here in New York.

And because you have a bird's eye view of what's happening stateside, give us an idea of some of the differences in demand when we're talking about different regions across the globe.

Yes, so we're seeing sort of almost a regulatory arbitrage.

So we're seeing more blockchain adoption, institutional adoption in the US because of regulated clarity, and the same clarity will come in other jurisdictions.

So at the moment the US has an advantage over let's say Europe where the meeker rules are still being clarified, and the US seems to be more open to adoption of this technology, adoption and use cases in the financial industry.

So we see more and more use cases, but an example of Monument Bank has shown that outside of the US there's still transactions of this size and the capacity happening, and we're very proud of what we've done with Monument, but we've got similar conversations happening with large US custodians and US financial institutions.

Yes, and I'm glad you mentioned Mika because you're sandwiched in terms of the UK between Europe as well as the US.

So what do you think will happen as we fast approach that July 1st deadline?

I think you'll see some counterparties would have met those deadlines, got adoption.

We're also hearing that certain stable coins haven't applied or have failed and missed the deadline.

The question people have to ask is, is that a region that matters?

In Europe, with a large population, the large financial wealth that it has, is material.

At the same time, people will always follow the capital markets, and they'll always follow where there's least resistance, where the regulatory arbitrage works, people again, as we've seen, will come to the US.

So as we get more clarity in the US, pardon the pun, with the Clarity Act and other things, I think you'll see more and more institutional adoption follow.

And Fahmy, finally, you're here in New York to attend the Zero Hash event that is taking place at the New York Stock Exchange tomorrow.

So what are you looking forward to?

Well, I've, I've come to listen.

I want to hear the other counterparts, the institutions in the room, and try and solve their problem.

Too often in blockchain we go after a problem that we're trying to solve as opposed to listening to the counterparts.

I come from 20 plus years in the financial industry.

We always were solving clients' problems, making them a return.

So for us at midnight, we know the value of what our technology can do.

It's going and identifying the partners who have a problem that we can solve.

We're having conversations, as I say, with large US institutions, large European investment banks, and beyond.

So we'll keep listening and we believe our tech will help solve many of those problems.

Well, Fay, it was great having you on the show.

Thank you so much for joining us and thank you so much for sharing all of your insights today.

Thank you.