HSBC wins tender to pilot UK government bonds in tokenised form

• After a four-month competitive tender the UK government has chosen HSBC’s Orion platform to host issuance of an experimental tokenised government bond

• The so-called Digital Gilt Instrument (DIGIT) has proceeded slowly since it was first announced in November 2024, and progress looks set to remain slow

• Though a digital gilt is a potentially transformative initiative, concern remains that the UK is falling behind rival jurisdictions in its embrace of tokenisation

The United Kingdom government has chosen Orion, the tokenisation platform built and operated by HSBC, to issue the pilot version of the tokenised gilt-edged security (or government bond) promised by Chancellor of the Exchequer Rachel Reeves in November 2024.

Progress on the Digital Gilt Instrument (DIGIT), as it is dubbed, has been slow – and is set to remain slow.

The tender to host the issuance was published by Her Majesty’s Treasury on 7 October 2025, nearly a year after the initial announcement.

The pilot test will take place within the Digital Securities Sandbox (DSS) launched by the Bank of England and the Financial Conduct Authority (FCA) in September 2024 to enable digital assets firms to experiment with using blockchain technology to trade and settle securities in tokenised form.

HSBC is one of 16 firms to have entered the DSS.

The tender says the contract date will run to 14 December 2028, with a possible extension to 14 December 2029, or nearly four years hence.

HSBC says the DIGIT announcement puts the UK in “pole position among the G7 nations to issue the first-ever tokenised sovereign bonds on a blockchain.”

But the Association for Financial Markets in Europe (AFME), whose membership encompasses investment and custodian banks, notes that the UK is “currently behind its peers in the issuance of DLT-based securities,” and urged the government to be “as ambitious as possible” on the initial issuance size and to commit to using tokenisation in its normal issuance programme.

“Today’s announcement marks an important stage in the development of the UK’s Digital Gilt Pilot,” says James Kemp, Managing Director at AFME. “As the UK moves towards the first of what we recommend should be a series of digital gilt issuances, it is critical that momentum is maintained. With the technology now proven by successful issuances – including by governments across multiple jurisdictions - we would urge the UK to now drive tokenisation forward by moving at pace and setting an ambitious issuance calendar that will build confidence that the UK supports capital markets digitisation.”

Issuing government bonds in tokenised form has the potential to turbo-charge tokenisation in general, not just by lowering issuance costs and speeding up settlement timetables but widening primary market distribution and above all boosting secondary market trading by providing a digital asset that is naturally liquid.

Lucy Rigby, Economic Secretary to the Treasury, argues that, even if progress is slow, this is how the government is thinking. The Treasury and the Debt Management Office (DMO) obviously expect the pilot to work out how the UK government can scale digital bond issuance, but it is also expects digital gilts to catalyse wider adoption of tokenisation in all parts of the financial markets.

“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,” she says. “This is exactly the kind of financial innovation we need to keep the UK at the forefront of global capital markets and I am looking forward to working with HSBC and other parties to deliver DIGIT.”

The tender was competitive, but the government has not disclosed which firms competed with HSBC for the contract.

However, whoever took part, HSBC was the obvious choice, with a sustained record of digital bond issuance that the bank says now totals more than US$3.5 billion in digitally native bonds for sovereign, supranational, central bank, financial and corporate issuers.

HSBC pioneered a digital sterling bond for the European Investment Bank (EIB) in 2023; a multi-currency digital green bond for the Hong Kong Government in 2024; a digital bond for itself, also in 2024; a second bond for the EIB as part of the European Central Bank (ECB) blockchain trials and experiments in 2024; digital treasury certificates for the Grand Duchy of Luxembourg in 2025; a digital bond for First Abu Dhabi Bank (FAB), listed on the Abu Dhabi Securities Exchange, also in 2025; a digital bond for QNB Group, also in 2025; and, most importantly, the largest digital bond issue to-date, the multi-currency US$1.3 billion-equivalent green bond issued by the Hong Kong Government, also in 2025.

“The UK is a home market for us and the sixth largest economy in the world,” says Patrick George, Global Head of Markets and Securities Services at HSBC. “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.”

The UK government has also appointed Ashurst LLP to provide legal services for the DIGIT pilot.

“We are proud to have been appointed by HM Treasury to advise on this landmark transaction,” says Etay Katz, Head of Digital Assets at Ashurst. “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.”

Keywords: