HM Treasury picks HSBC to provide platform for UK government’s first blockchain bond issuance
The UK government is to use HSBC as platform provider for its first digital bond issuance, it has announced.
HM Treasury (HMT) has been gearing up for the issuance of a ‘digital gilt instrument’ – being referred to as ‘DIGIT’ and issued using distributed-ledger technology (DLT) – for the past 18 months, with the idea first put forward by the previous administration.
A gilt is a government liability denominated in sterling and listed on the London Stock Exchange. They have been issued by the UK Debt Management Office (DMO) on behalf of HMT since 1998.
City minister Lucy Rigby highlighted DIGIT as “actively bringing digital innovation to the heart of government” in a speech at the London Tokenisation Summit on 29 January, telling the audience to expect “further announcements as we prepare to issue”.
HMT announced on 12 February that, following a competitive procurement process, it will be using HSBC’s asset tokenisation platform Orion for the DIGIT pilot, as well as London-headquartered Ashurst LLP for legal services.
“As other financial hubs explore DLT, the potential for significant growth in this area is clear,” HMT stated. The pilot aims to enable the government to explore how DLT can be applied to UK sovereign debt issuance processes and to “catalyse the development of UK-based DLT infrastructure and the adoption of DLT across UK financial markets”.
Read more: Blockchain bond ‘bringing digital innovation to heart of government’: UK’s City minister
DIGIT puts UK in G7 ‘pole position’
HSBC highlighted in a press release that DIGIT “places the UK in pole position among the G7 nations to issue the first-ever tokenised sovereign bonds on a blockchain”.
The UK government will nonetheless be playing catch-up with administrations including Hong Kong, the Philippines and Thailand, as well as city authorities such as Lugano (Switzerland) and Quincy (Massachusetts, US), in issuing a bond using blockchain. The World Bank and European Investment Bank (EIB) have been in the vanguard at a multilateral level.
“We must go further than digital issuances that have taken place across the world already, and that is why we’re looking to deliver an ambitious set of features, including [on blockchain] settlement, supporting interoperability, over-the-counter trading, and we’ll be working with industry and the digital markets champion to explore collateral mobility and secondary market trading,” Rigby – who is also economic secretary to the Treasury – told the audience at the London Tokenisation Summit last month.
HSBC highlighted in its press release that issuing digital gilts and digital corporate bonds on a blockchain “has the potential to improve the debt capital markets structure in the UK, by significantly accelerating transaction settlement times with a more efficient means to issue and trade bonds”. It added that this “can help drive liquidity in both the primary and secondary markets”.
The HMT’s announcement emphasised that the government wants to “ensure that DIGIT is accessible to a wide range of participants and supporting the development of secondary markets” and is “actively engaging with additional suppliers to support the delivery of these features, together with HSBC”.
Read more: UK government readies procurement for digital gilt issuance
‘Experimental’ exercise
HMT and the DMO (which is an executive agency of HMT) launched a preliminary market engagement exercise almost 11 months ago to “seek information to understand what technological options are available to facilitate an issuance, and how DIGIT can be best designed to stimulate wider development and adoption of DLT infrastructure across UK capital markets”.
In July 2025 a ‘DIGIT pilot update’ was published in which the government stated that it had been “carefully reviewing responses to inform its next steps” and listed the features, reiterated by Rigby in her recent speech, that the pilot would aim to test. An invitation to tender was published in October.
The previous Conservative government’s 2024 Spring Budget contained a commitment to “continue to examine, and engage with firms on, the possible applications and benefits of applying DLT to a sovereign debt instrument”. After the election of the Labour government in July 2024, chancellor of the exchequer Rachel Reeves confirmed plans for DIGIT in a speech in November that year, with details revealed four days later by then-economic secretary to the Treasury Tulip Siddiq.
The gilt market comprises two types – conventional gilts and index-linked gilts. The pilot aims to issue a digital bond “with similar features to a conventional gilt” and will “sit outside of and be separate from the Debt Management Office’s gilt and Treasury Bill operations” because it is “experimental”, according to Siddiq’s parliamentary statement in November 2024.
The DIGIT pilot will be run through the Digital Securities Sandbox (DSS), which was opened in 2024 by the Bank of England (BoE) and Financial Conduct Authority (FCA). Sandboxes are virtual spaces in which new technologies can be tested and experimented with, overseen by regulators.
Read more: UK ‘digital gilt’ pilot to run independently from Debt Management Office
Orion’s ‘proven track record’
“HSBC is delighted to be supporting the continued development of the gilt market, market innovation and the growth of the broader UK economy,” said HSBC global head of markets and securities services Patrick George in the bank’s press release, adding that Orion “already has a proven track record of delivering successful and liquid market outcomes in other jurisdictions”.
Orion has to-date enabled the issuance of more than US$3.5bn in digitally native bonds globally across sovereign, supranational, central bank, financial institutional and corporate sectors, the bank stated, going on to highlight that the platform been used in first-of-their-kind transactions, including: the EIB’s first digital sterling bond (2023); the world’s first digital multi-currency digital green bond, which was issued by the Hong Kong government (2024); and the launch of the EIB’s first bond under the Eurosystem’s exploratory work on new technologies for wholesale central bank digital currency settlement (2024).
The tender notice stated estimated contract dates for the appointed company (HSBC) of 15 December 2025 to 14 December 2028, with a possible extension to 14 December 2029.
“We are proud to have been appointed by HM Treasury to advise on this landmark transaction,” said Ashurst head of digital assets Etay Katz. “Our team brings deep expertise in digital assets transactions, and we look forward to working with HSBC and supporting the government as it takes this transformative step for UK capital markets.”
This article was originally posted on the website of our sister title, Global Government Finance. Sign up for Global Government Finance’s newsletter.
About Ian Hall
Ian is Global Government Finance editor. He has formerly held roles including UK director of Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in the Balkans at English-language weekly the Sofia Echo (Bulgaria: 1998-1999).
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