UK Picks Six Banks to Lead First Digital Government Bond

TLDR

• UK Treasury named six banks as joint lead managers for a pilot digital government bond.
• The banks are Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets.
• The bond, called DIGIT, will run on HSBC’s Orion platform inside the Digital Securities Sandbox.
• Pilot issuance is expected by the first quarter of 2027, testing blockchain settlement for sovereign debt.
• US and UK regulators are working together on shared rules for tokenized securities.

The UK government has chosen six banks to lead the issuance of its first digital government bond. The pilot is expected to launch by the first quarter of 2027.

LATEST: 🇬🇧 The UK has picked Barclays, HSBC, Lloyds, Morgan Stanley, NatWest, and RBC Capital Markets to lead its DIGIT pilot, the country’s first digital-native government bond. pic.twitter.com/PkLvSnqr6h

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Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets will serve as joint lead managers. They were selected after a competitive process run by HM Treasury.

Economic Secretary to the Treasury Lucy Rigby announced the news on Tuesday. She spoke during a keynote at UK Digital Assets Week.

The bond is called the Digital Gilt Instrument, or DIGIT. It will test how blockchain technology can work in government debt markets.

Six Banks Chosen For The Pilot

The six banks will handle underwriting, investor engagement and distribution. Their job is to build demand for the bond and manage its sale.

HM Treasury said it assessed the banks using clear and open criteria. The selection lets banks start talking with investors right away.

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Rigby said the appointments mark a step toward issuing the digital gilt early next year. She called the project “a practical test of new financial market infrastructure.”

The bond will be short dated and issued directly on digital infrastructure. It will settle onchain and operate inside the UK’s Digital Securities Sandbox.

The transaction will stay separate from the government’s main debt program. Officials said this keeps the pilot contained while testing new systems.

How The Technology Will Work

The bond will run on HSBC’s Orion platform. HSBC was named the pilot’s technology supplier back in February.

In July, HSBC and the London Stock Exchange Group signed an agreement to build a digital securities depository link. Rigby said this would let investors reach DIGIT through either system.

Rigby also said HSBC became the first firm approved to run a live digital securities depository in the sandbox. ClearToken has since become the second approved firm.

The government plans to list DIGIT as the first digital asset on the London Stock Exchange Group’s main market. More issuances could follow if the pilot succeeds.

Industry voices say the bond still needs to connect with older financial systems. Richard Baker of Tokenovate said onchain settlement must link with cash, custody and existing infrastructure.

Baker sits on HM Treasury’s Wholesale Digital Markets Industry Taskforce. He said shared standards and legal clarity will help keep the bond consistent with current rules.

Marius Jurgilas, CEO of Axiology, said the project could widen the investor base for UK debt. He said regulated digital infrastructure could create more funding options over time.

The Bank of England is also working on a synchronization service. It would link digital asset platforms with the sterling payment system, with a target date of 2028.

Separately, UK banks have been testing tokenized deposits for other uses. Barclays, Lloyds and NatWest completed two tokenized mortgage transactions in September.

Those tests locked funds during the property process and released them automatically once it was finished. A separate group of banks tested a payment tied to an online purchase.

UK Finance said banks plan to issue three more digital bonds in the first quarter of 2027. Those bonds would be traded and settled using tokenized deposits.

The US and UK are also working together on tokenized asset rules. Regulators from both countries agreed in July to look for common ground on settlement and collateral use.

The two countries plan to work with a private sector group for one year. The group will test cross border uses of tokenized assets and share results with officials.

The Treasury said it will introduce new legislation in the coming months. The rules would support digital services and bond issuances inside the sandbox.