UK Treasury moves to issue digital government bonds via HSBC blockchain

YM Lee

Summary

The UK Treasury said it is pursuing a pilot for digital government bonds using HSBC’s Orion blockchain platform.
The blockchain-based digital gilt will be issued in a regulatory sandbox, and is expected to help improve bond market structure by shortening settlement times and enhancing operational efficiency.
If the pilot succeeds, the UK could position itself as a leading advanced economy to fully adopt a blockchain-based issuance model in the public debt market.

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The UK Treasury has selected HSBC’s blockchain platform to run a pilot issuance of digital government bonds. As part of its strategy to modernize the UK’s capital market infrastructure, it plans to trial a blockchain-based system for gilt issuance and settlement.

According to Bloomberg on the 11th (local time), the UK Treasury has chosen HSBC Holdings’ “Orion” platform as the technology provider for issuing digital gilts (DIGIT). Digital gilts refer to government bonds issued, distributed and settled on a blockchain.

The Treasury plans to issue the digital bonds within a regulatory sandbox overseen by the UK Financial Conduct Authority (FCA). This is a testing phase aimed at assessing technical and legal risks ahead of any rollout in the live market.

HSBC said blockchain-based bond issuance can help improve the structure of the UK bond market by shortening settlement times and boosting operational efficiency. Traditional gilt markets typically settle several days after a trade, while tokenized bonds can be cleared on a near real-time basis.

The UK is among a number of countries pursuing financial market modernization using blockchain technology. Tokenizing bonds could reduce transaction costs and improve liquidity. However, the tokenized bond market remains small relative to the global bond market, and limited secondary-market liquidity is cited as a constraint on broader adoption.

UK Chancellor of the Exchequer Rachel Reeves said in November 2024 that issuing digital government bonds could be possible within the next two years.

HSBC’s Orion platform has been used worldwide for more than $3.5 billion in digital-native bond issuance to date. It has also been used for the European Investment Bank’s (EIB) first digital sterling-denominated bond in 2023, and for the Hong Kong government’s roughly $1.3 billion multi-currency green bond issuance in 2025.

If the pilot proceeds successfully, the UK could emerge as one of the leading advanced economies to fully adopt a blockchain-based issuance model in the public debt market.