In a move to modernize its sovereign debt market, the UK government has appointed HSBC and law firm Ashurst to oversee a digital gilt trial expected to launch this year.
The Treasury’s decision comes as Britain faces criticism for moving slower than financial hubs such as Hong Kong and Luxembourg in adopting tokenized government bonds. Chancellor Rachel Reeves first unveiled the pilot plan in late 2024.
The trial will take place within the Bank of England’s “digital sandbox.” This controlled environment allows financial innovations to operate under relaxed regulatory rules before permanent changes are introduced to market structures. The pilot aims to reduce settlement times and lower operational costs for market participants.
HSBC brings prior experience in blockchain-based debt issuance. The bank has arranged more than $3.5 billion in digital bond issuances through its proprietary Orion blockchain platform. This includes Hong Kong’s $1.3 billion green bond, one of the largest tokenized debt sales globally.
Britain is seeking to position itself as the first G7 country to issue sovereign debt on the blockchain. The appointment of HSBC and Ashurst is seen as a step toward accelerating that ambition.
However, industry experts caution that even if the pilot proves successful, wider adoption of digital gilts will require legislative changes and clearer tax treatment before becoming a standard part of the UK debt market.
Hong Kong has already advanced in this space. On Wednesday, Hong Kong Financial Secretary Paul Chan Mo-po said the region’s multicurrency digital green bond offering helped strengthen liquidity.
“We will regularize the issuance of tokenized green bonds,” he said at a global blockchain conference in Hong Kong, indicating continued momentum in the market.
The UK’s pilot is expected to test the operational and regulatory viability of blockchain-based sovereign bonds before any large-scale rollout.
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