| What to Know: - UK's DIGIT pilot tokenises gilts on DLT, operated by HSBC Orion. - Structured as short-dated within DSS, independent of main debt programme. - Potentially reduces reconciliations, settlement frictions; improves transparency and auditability. |
The UK’s Digital Gilt Instrument (DIGIT) is a pilot to issue government bonds as tokenised, digitally native securities recorded on distributed ledger technology. HM Treasury selected HSBC Orion to run the pilot issuance, as reported by Reuters (https://whbl.com/2026/02/12/uk-picks-hsbc-as-platform-provider-for-its-digital-bond-pilot-issuance/).
The inaugural digital gilt will be issued on Orion following a competitive tender, signalling a controlled test of tokenised or digital gilts alongside the conventional market, as reported by GlobalCapital (https://www.globalcapital.com/article/2fzanf504psn0e1cbf7r4/people-and-markets/uk-treasury-picks-hsbcs-proven-platform-for-digital-gilt-pilot). The initiative focuses on proving operational readiness rather than replacing existing issuance.
According to The Block (https://www.theblock.co/post/389557/uk-hsbc-tokenized-bond), DIGIT is designed to be short-dated, operated within the UK’s Digital Securities Sandbox (DSS), and independent of the main debt management programme. That structure is intended to contain risk, enable iterative learning, and assess efficiency gains without disrupting routine gilt supply.
For primary dealers and asset managers, the pilot could reduce reconciliation steps and settlement frictions while improving transparency and auditability. Any cost or speed benefits will depend on sandbox rules, participant readiness, and interoperability with existing market infrastructure.
On HSBC Orion, issuance is digitally native: the gilt is created as a token on the platform’s distributed ledger, allocations are recorded on-chain, and lifecycle events are automated under DSS-governed controls. Settlement is designed to synchronise asset delivery with the corresponding cash leg, with records time-stamped for end-to-end traceability.
Platform maturity underpins the workflow. According to The Asian Banker (https://www.theasianbanker.com/press-releases/uk-treasury-selects-hsbc-orion-for-digital-gilt-pilot-advancing-tokenised-sovereign-bond-issuance), Orion has supported more than $3.5 billion of digitally native bond issuance across sovereign and institutional use cases, indicating tested issuance, custody, and lifecycle tooling.
There is relevant sterling-market precedent for blockchain settlement. Central Banking reports HSBC and RBC settled a £50 million three-year floating-rate sterling note on-chain at 12 basis points over Sonia in 2023, demonstrating feasibility in UK currency operations.
Policy intent frames the pilot’s technical design, with authorities exploring whether DLT can lower operational costs and support market competitiveness without compromising safeguards. “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,” said Lucy Rigby KC MP, Economic Secretary to the Treasury.
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