Lynq CEO Urges Focus on Interoperable Settlement Infrastructure Over New Tokens

As financial institutions start adopting multiple forms of digital money, Lynq CEO Jerald David is warning that the market urgently needs interoperable, around-the-clock settlement rails that can move cash and collateral seamlessly across systems and jurisdictions. David’s remarks, shared with crypto.news, were prompted by the Bank of England’s latest Digital Pound Lab experiment. That Phase 2 pilot — announced Aug. 12 — brought together NOBO Finance, Dun & Bradstreet and Polygon Labs to test whether private stablecoins and a simulated digital pound can be used together in a single cross-border trade-finance payment flow. In the scenario, an exporter receives an advance via a stablecoin while a UK importer settles the final payment in simulated digital pounds; both legs are coordinated within one transaction so the teams can study whether private and central bank money can interoperate without one side waiting on the other. “I do not expect a single form of digital money to replace all others,” David said. “Stablecoins, tokenized deposits, tokenized money market funds, potentially CBDCs, and traditional bank money are all likely to have different roles depending on the counterparty, jurisdiction, and type of transaction.” His emphasis: the real problem isn’t which instrument wins, but whether the plumbing connects them. Why rails matter - Fragmented settlement systems create liquidity frictions. An institution may have enough capital overall but not in the right form, market, or place when a trade must settle. That forces firms to pre-position balances across venues and counterparties, tying up capital. - Time-zone and operating-hour mismatches compound the issue. Crypto markets trade 24/7, but many bank payments still obey cut-offs and business hours. A margin call outside banking hours may be met on paper, but practically useless if funds can’t reach the counterparty until the next business day. - The interoperability gap isn’t just about swapping tokens. Institutions often hold different instruments for different needs — bank deposits for payments, stablecoins for blockchain rails, tokenized MMFs for yield — and they need reliable ways to shift value between them when obligations arise. How participants are tackling it - Polygon supplied the stablecoin settlement piece and smart-contract infrastructure via its Open Money Stack, while the simulated digital-pound leg remained on the Bank of England’s demonstration ledger. Polygon has said bank money, stablecoins, tokenized deposits and a possible digital pound currently run on systems that don’t “talk” easily to one another. - NOBO Finance led the trade-finance use case (invoice factoring backed by an electronic bill of lading), with Dun & Bradstreet contributing verified identity and credit data and Polygon ensuring the payment could carry a portable credit profile alongside it. - The Bank of England’s Digital Pound Lab is a simulated environment — APIs, wallets, a demo ledger and smart-contract tools — that uses no real customers or money and is not a regulatory sandbox. The Bank and HM Treasury will decide next steps later in 2026; issuing a digital pound would still require parliamentary approval. Bigger market moves underscoring David’s point - U.S. banks are building around-the-clock settlement options: Wells Fargo’s tokenized-deposit pilot (reported Aug. 4) aims to let selected corporate clients move USD-GBP funds 24/7 on the bank’s blockchain platform, with a wider rollout expected through 2027. - Major U.S. banks — JPMorgan Chase, Bank of America, Citigroup and Wells Fargo — are backing plans for a shared tokenized-deposit network targeted for 2027 so bank-issued digital money can circulate between institutions instead of remaining siloed. - Tokenized money market funds and stablecoins provide alternative rails and liquidity pools, but each instrument has different legal, operational and risk characteristics: CBDCs would be central-bank liabilities, commercial bank tokenized deposits remain bank liabilities, and stablecoins depend on private issuers’ reserve arrangements. - At the cross-border central-bank level, the BIS’s Project Agorá has shown tokenized commercial bank deposits can, in prototype, settle against tokenized central bank reserves across jurisdictions — signaling technical feasibility for interoperable rails at scale. Lynq’s real-world view Lynq operates a broker-dealer-run settlement network for institutions that need to earn yield, move funds and settle digital-asset transactions. David said Lynq sees the mismatch first-hand: the priority is not minting yet another type of digital money, but building the rails and common standards that let capital flow where and when it’s needed. Bottom line Most stakeholders now expect a multi-asset, multi-rail future: stablecoins, tokenized deposits, tokenized funds, CBDCs and traditional bank money will likely coexist. The crucial next step is creating interoperable settlement infrastructure, legal frameworks and operating standards so those different monies can settle reliably and instantly — anytime, anywhere — without locking up liquidity or increasing systemic risk. Phase 2 of the Bank of England’s lab is a controlled, three-month experiment, but it underscores an industry-wide truth: tokens alone won’t fix settlement frictions; the rails that connect them will.