UK Treasury taps HSBC’s Orion blockchain to pilot first G7 digital gilt

The UK Treasury has selected HSBC Holdings, Europe’s largest bank by assets, and Ashurst, a prominent international law firm, to lead a pilot program for digital gilt, a move that could make the UK the first G7 country to issue sovereign bonds directly on a blockchain.

The pilot will take place in the Bank of England’s digital sandbox, providing a regulated environment to test tokenized government securities.

Digital gilts are government bonds issued as digital tokens on distributed ledger systems. The project will leverage HSBC’s Orion platform to issue, manage, and settle the pilot bonds, known as DIGIT, while Ashurst will support regulatory and legal aspects.

Orion, introduced in 2023, uses blockchain technology to digitize traditional financial assets and settlement currencies for institutional clients. It provides atomic settlement, connects with global clearing networks, and streamlines institutional trade and back-office processes.

To date, the platform has facilitated more than $3.5 billion in digital bond issuances worldwide, including deals like the European Investment Bank’s GBP-denominated bonds under Luxembourg regulation.

The pilot demonstrates the UK’s intent to integrate blockchain with traditional capital markets, formalize the legal status of digital assets, and demonstrate leadership in financial innovation. It also aims to attract investment, reduce operational costs, and create a framework for future tokenized government securities.