HSBC Chosen to Tokenise UK Government Bonds

UK Treasury appoints HSBC for digital bond pilot.

The UK Treasury has appointed HSBC to oversee the pilot issuance of digital government bonds (DIGIT).

According to the statement, the launch of the tokenised product aligns with the government’s efforts to maintain the country’s status as a global financial hub.

“As other jurisdictions explore the potential of distributed ledger technology, the potential for significant growth in this area is clear,” the release stated.

The primary aim of the pilot is to facilitate the circulation of tokenised short-term government bonds within a digital securities sandbox.

The authorities also believe that DIGIT will address several issues:

• it will provide the government with an opportunity to explore how blockchain technology can be applied in sovereign debt issuance processes;
• it will aid in the development of distributed ledger infrastructure in the country and its adoption in financial markets.

The project will be executed by HSBC’s digital division, Orion, launched in 2023. The organisation has previously issued similar products, with a total volume estimated at $3.5 billion.

“The UK is our home market and the sixth-largest economy in the world. HSBC is pleased to support the further development of government bonds, innovation, and overall economic growth,” added Patrick George, head of the bank’s global securities division.

The government has engaged the firm Ashurst to provide legal services for the pilot project.

Earlier in January, UK authorities relaxed rules for digital IDs, removing the requirement for employment.