The UK Treasury has designated HSBC's Orion platform to manage a pilot digital gilt program within the FCA sandbox, aiming to modernize Capital markets and streamline clearing and settlement processes.
The UK is entering a crucial phase in its efforts to modernize its financial market infrastructure with the rollout of a digital government bond pilot program. The Treasury has appointed HSBC Holdings' blockchain platform to manage the project, a move officials hope will alleviate criticism that the government has been slow to promote the technology.
The pilot program will see the country issue its native government debt instrument based on blockchain technology within a sandbox managed and supervised by the Financial Conduct Authority. By Tokenize bonds, authorities expect to simplify gilt transactions, reduce costs, and modernize market infrastructure. In a statement on Thursday, HSBC said blockchain-based bonds could further enhance the efficiency of the UK Capital markets by shortening clearing times.
Patrick George, Global Head of Securities Markets and Services at HSBC, noted that they are excited to support the continued development of the gilt market, encouraging market innovation and supporting economic growth. The UK government has recently been increasingly signaling its support for financial innovation, particularly in the areas of digital assets and Tokenize.
Racing to catch up with leading financial centers.
In a speech at Mansion House in November 2024, Chancellor Rachel Reeves outlined plans to test digital gilts, predicting the UK could begin issuing them within two years. However, the UK is still considered to be lagging behind jurisdictions such as Hong Kong and Luxembourg, which have completed digital government debt issuances, raising concerns about potential delays.
Mike Coombes, Director of Corporate External Affairs at PrimaryBid, argues that the convergence between digital and traditional finance is underway, warning that the UK will either take the Vai or be forced to follow. He adds that through digital gilts, the UK can codify the legal treatment of digital assets and send a clear signal of its intention to actively engage in digital finance.
Lucy Rigby, the Minister for City, affirmed that this is the kind of financial innovation needed to keep the UK at the forefront of global Capital markets, emphasizing that the initiative will demonstrate how this technology can be used to streamline processes and reduce costs for businesses.
However, John Allan, Head of Innovation and Operations at the Investment Association, noted that while the appeal of digital gilts lies in their near-instantaneous payment capabilities, the program still needs a suitable legal framework and tax mechanism to become a regular component of the UK government debt market. He said he has been following the project very closely since 2023, and it has taken quite some time to reach this stage.
To date, through its Orion blockchain system, HSBC has managed digital bonds totaling over US$3.5 billion for clients, including countries, central banks, and businesses. In 2025, HSBC also oversaw a US$1.3 billion green bond issuance by Hong Kong, described as a record-breaking digital bond transaction.
