UK names six banks to lead first digital gilt issuance in early 2027

The UK government has appointed six banks to lead its first digital gilt issuance, with the pilot expected by the first quarter of 2027.

Summary

• Six banks will handle underwriting, investor engagement and distribution for the DIGIT pilot.
• HSBC’s Orion platform will host the bond within the UK’s Digital Securities Sandbox.
• Industry executives say digital bonds need connections to cash, custody and existing settlement systems.
• U.S. and UK authorities are examining common approaches to tokenized securities and settlement.

HM Treasury announced on Oct. 6 that Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets will serve as joint lead managers for the Digital Gilt Instrument, known as DIGIT.

Following a competitive procurement process, the appointments allow investor engagement to begin, the department said. Economic Secretary to the Treasury Lucy Rigby disclosed the selection during her keynote address at UK Digital Assets Week.

UK digital gilt banks will handle the sale and investor engagement

Under the Treasury’s mandate, the six institutions will provide underwriting services, support discussions with investors and distribute DIGIT on issuance day. The department said its selection process assessed suppliers against transparent and objective criteria.

For the pilot itself, the Treasury has specified a short-dated bond issued directly on digital infrastructure, with onchain settlement and a platform operating inside the Digital Securities Sandbox. According to its design, the transaction will remain independent of the government’s main debt management programme.

In her speech, Rigby said the government intends to list DIGIT as the first digital asset on LSEG’s main market. Preparations for possible further issuances are also underway, subject to the success of the first transaction, she said.

The minister described the project on X as “a practical test of new financial market infrastructure,” while pointing to issuance early next year.

HSBC’s platform will connect with LSEG infrastructure

As crypto.news reported on July 15, the planned first digital sovereign bond will be denominated in sterling and issued through HSBC’s Orion platform. The report traced the pilot to its announcement in 2024 and HSBC’s appointment as platform supplier in February 2026.

At the time, the Treasury said the project would examine whether distributed ledger technology could shorten settlement times, reduce reconciliation work and lower operating costs. Bank of England Governor Andrew Bailey also said the central bank would work toward accepting DIGIT as collateral in its market operations.

According to the Treasury’s latest announcement, HSBC and London Stock Exchange Group signed a memorandum of understanding in July to develop a bilateral Digital Securities Depository link. Rigby said the connection would allow investors to access DIGIT through either infrastructure.

During Tuesday’s address, the minister also said HSBC became the first firm approved to operate a live digital securities depository in the sandbox in July. ClearToken has since become the second firm to receive that approval, she said.

The government intends to introduce secondary legislation over the coming months to support digital services and issuances within the sandbox, according to Rigby.

Digital settlement needs cash and custody connections

For Richard Baker, Tokenovate’s CEO and founder, the pilot’s infrastructure test includes the connections between digital securities and established financial systems. Baker, who sits on HM Treasury’s Wholesale Digital Markets Industry Taskforce, told Cointelegraph:

“On-chain settlement will need to connect with cash, custody and existing settlement infrastructure, with common standards and legal certainty keeping lifecycle events consistent across systems.”

Building those connections from the outset could help establish whether tokenization improves liquidity and market efficiency without creating separate digital systems, he said.

A July 22 report examined the DIGIT cash settlement challenge, citing the Bank of England and Financial Conduct Authority’s work on payment options. The regulators were considering tokenized deposits, regulated stablecoins and central bank money as settlement assets.

According to the central bank’s May consultation, a planned synchronization service would link digital asset ledgers with sterling held in its real-time gross settlement system. The Bank targeted 2028 for the service, which would allow the securities and payment sides of a transaction to settle together.

In separate banking tests covered on Sep. 24, UK Finance said Barclays, Lloyds and NatWest completed two tokenized deposit mortgage transactions. Another group of three banks, including HSBC, tested a person-to-person payment tied to a simulated online marketplace purchase.

For the mortgage tests, funds remained locked during the property process and were released automatically upon completion, according to UK Finance. In the marketplace test, payment depended on confirmation that goods had been received, although no physical goods changed hands.

Participating banks plan to issue three digital bonds in the first quarter of 2027 that can be traded and settled using tokenized deposits, UK Finance’s payments and innovation managing director Jana Mackintosh told Reuters. The association also plans to establish a company, rulebook and governance framework for the deposit project.

U.S.-UK work covers cross-border securities settlement

For U.S. market participants, the related policy work includes cooperation between American and British financial regulators. An Aug. 12 report on the U.S.-UK tokenized markets recommendations covered proposals for cross-border experiments and common regulatory approaches, while distinguishing the recommendations from enforceable rules.

Under the task force’s July 14 recommendations, the SEC, CFTC, FCA and Bank of England will seek common approaches to the regulatory treatment of tokenized assets. Their work includes settlement finality and the potential use of stablecoins or tokenized money market funds as margin collateral at central counterparties.

The two governments also intend to engage a private-sector-led group for one year to test cross-border uses of tokenized assets and share practices with officials, according to the policy paper.

In comments to Cointelegraph, Axiology CEO and former central banker Marius Jurgilas said connecting securities issuance, distribution, trading and settlement through regulated infrastructure could “broaden their investor base and create more funding options.” He added that government support could help establish a market where capital moves more easily between countries and reaches more issuers.