The UK Treasury has chosen to launch a trial program for digital gilts, the country’s first tokenized government bonds, using HSBC’s Orion blockchain technology. Officials see the test as a way to modernize the gilt market by leveraging blockchain technology to reduce costs and expedite settlement.
How the Digital Gilt Pilot Will Work
Under the pilot, the UK will issue a digital gilt instrument known as DIGIT on HSBC’s permissioned Orion platform. The UK will issue, distribute, and settle the bond on a blockchain within a regulatory sandbox overseen by the Financial Conduct Authority.
The Treasury wants to test shorter settlement times than the regular gilt market, where trades usually settle over one or two days. By tokenizing gilts, officials aim to reduce operational risk, improve investor transparency, and simplify how bonds move between market participants.
Why the UK Picked HSBC’s Orion Platform
HSBC’s Orion platform already supports digital bond issuance for governments, central banks, and large companies worldwide. HSBC says Orion has handled more than $3.5 billion in digital native bonds, including the European Investment Bank’s first digital sterling bond and a $1.3 billion green bond for Hong Kong.
UK officials chose Orion as the technology base for DIGIT after a tender process that followed earlier public consultations on digital gilts in 2023 and 2024. The decision aims to build on HSBC’s prior work in tokenization while keeping the pilot within a controlled, permissioned environment that complies with UK debt management rules.
Chancellor Rachel Reeves initially outlined plans for a digital gilt trial in a 2024 Mansion House address, with a two-year launch timeline. Since then, the UK has fallen behind countries such as Hong Kong and Luxembourg, which have completed their digital sovereign bond sales.
Britain has now joined top markets investigating blockchain for public debt management through the HSBC deal, and if the trial project is successful, some analysts predict it will surpass other G7 nations. Market organizations applaud the test but caution that lawmakers must update legislation, tax laws, and settlement procedures before digital gilts become normal issuance.
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