The UK Treasury has named HSBC as the platform provider for the Digital Gilt Instrument (DIGIT) pilot issuance.
The pilot is the first step in making the UK the first G7 nations to issue the first-ever tokenised sovereign bonds on a blockchain.
Lucy Rigby KC MP, economic secretary to the Treasury, said: “We want to attract investment and make the UK the best place to do business, which is why we are launching DIGIT to understand how the UK can capitalise on this technology, deliver efficiencies and reduce costs for firms.
“This is exactly the kind of financial innovation we need to keep the UK at the forefront of global capital markets and I’m looking forward to working with HSBC and other parties to deliver DIGIT.”
Patrick George, global head of markets & securities services, HSBC, said: “The UK is a home market for us and the sixth largest economy in the world. HSBC is delighted to be supporting the continued development of the gilt market, market innovation, and the growth of the broader UK economy.
“After a competitive selection process, we are very pleased that HM Treasury has chosen our market-leading digital assets platform, HSBC Orion, which already has a proven track record of delivering successful and liquid market outcomes in other jurisdictions.”
Issuing digital gilts and digital corporate bonds on a blockchain could improve the debt capital markets structure in the UK, as blockchain technology could significantly accelerate transaction settlement times with a more efficient means to issue and trade bonds.
These faster settlement times can help drive liquidity in both the primary and secondary markets.
HSBC Orion has to-date enabled the issuance of over $3.5bn in digitally native bonds globally across sovereign, supranational, central bank, financial institutional and corporate sectors, and has been used in first-of-their-kind transactions, including by the European Investment Bank’s (EIB) first digital sterling bond (2023) and the world’s first digital multi-currency digital green bond, which was issued by the Hong Kong Government (2024).
Reacting to the announcement, Reuben Blamey, co-founder & COO of Agant, said: “This is certainly welcome news from HMT that they are moving to pilot tokenised gilt issuances. For those of us building institutionally focused digital financial infrastructure, the DIGIT initiative gives us confidence that we’re building in the right jurisdiction.
“Just as sovereign debt is foundational to the traditional financial system, DIGIT can be the foundational infrastructure for the digital assets economy. Especially from the standpoint of collateral management, repo markets and critically for us as a GBP stablecoin issuer, a stablecoin reserve asset. This also enhances the use case of a GBP stablecoin as a settlement/cash leg asset for settling tokenised debt trades.”
In response to the Treasury’s statement, Matt Ong, CEO and founder of Ctrl Alt, said: “We’re delighted to see a native government bond issuance progress in the UK. We look forward to future developments and the move toward a world where all issuances are on-chain, with the UK playing a pivotal role in that transition.”
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