HSBC and LSEG Sign MoU to Link Digital Depositories for UK’s First Blockchain Gilt Issuance #

HM Treasury has confirmed a target of the first quarter of 2027 for the inaugural Digital Gilt Instrument (DIGIT) transaction, which would make Britain the first G7 nation to place sovereign debt on a distributed ledger.

Chancellor Rachel Reeves announced the timeline in her annual Mansion House speech on 14 July, adding that the government is preparing for potential further DIGIT issuances contingent on the success of the first transaction. The pilot will be hosted on HSBC Orion, HSBC’s private blockchain-based digital assets platform, selected by HM Treasury following a competitive procurement process concluded in February 2026.

The day before the Mansion House speech, HSBC received Gate 2 approval from the Bank of England and the Financial Conduct Authority within the UK’s Digital Securities Sandbox (DSS). The clearance makes HSBC Orion the first DSS entrant authorised to operate as a live Digital Securities Depository (DSD), with a mandate to service digitally native bond issuance, settlement and lifecycle management, including for DIGIT.

HSBC and the London Stock Exchange Group (LSEG) also signed a memorandum of understanding to build a bilateral DSD link connecting HSBC Orion, acting as the issuer DSD, with LSEG’s own Digital Securities Depository, which will function as an investor DSD for settlement and asset servicing. The companies said the link is designed to let institutional investors access and hold DIGIT through either platform, reducing fragmentation across digital market infrastructure and broadening participation in the pilot.

LSEG and the government confirmed plans to list DIGIT on the London Stock Exchange’s main market as part of the pilot’s design. The government also indicated it intends to introduce legislation to amend the Digital Securities Sandbox framework when parliamentary time permits, with the goal of supporting DSD services and digital securities issuances across authorised digital ledger platforms.

DIGIT will be a sterling-denominated, digitally native gilt in which the blockchain ledger is the sole legal record of ownership. The pilot is also expected to test on-chain cash settlement using tokenised commercial bank deposits to enable atomic delivery-versus-payment. Participation is currently limited to institutional investors operating within the DSS regulatory perimeter.

The initiative is part of the UK government’s Wholesale Financial Markets Digital Strategy. Officials have framed it as a way to demonstrate that distributed ledger technology can reduce market costs, increase efficiency and attract investment to the City of London.

Source: Markets Media