- The UK government is planning to issue a blockchain gilt, a digital bond.
- The City minister stated that the new type of digital bond called DIGIT will be issued via distributed ledger technology.
- With the move, the UK intends to align with the global trend of blockchain-based government bonds.
The UK government is moving closer to issuing a blockchain-based government bond, signaling a push to bring digital technology into public finance. In a keynote speech, the City minister said the blockchain gilt plan reflects efforts to place digital innovation at the center of government operations.
HM Treasury has been preparing the launch of a “digital gilt instrument,” known as DIGIT, for the past 18 months. The bond would be issued using distributed ledger technology and tested within the UK’s Digital Securities Sandbox, as authorities explore how blockchain could modernize the country’s debt issuance process and support the growth of digital financial markets.
DIGIT Initiative Brings Blockchain Gilt to the UK
As per the latest report from the Global Government Forum, the UK plans to issue a new type of bond using blockchain technology. The City minister, Lucy Rigby, described this as “actively bringing digital innovation to the heart of government.”
The report stated that the HM Treasury has been preparing this blockchain gilt, called DIGIT, for the past 18 months. A gilt is a government bond issued in British pounds and listed on the London Stock Exchange. This is essentially a way for the government to borrow money.
The government report claims that the blockchain gilt, DIGIT, will be issued using a distributed ledger technology. This move aims to make the bond more transparent, allowing it to be recorded, tracked, and settled digitally rather than through traditional paper-based systems.
During a conference, Lucy Rigby stated, “When I talk about collaboration between industry and government, I don’t mean government just sitting back and watching while industry does all of the work.” She added,
“We’re actively bringing digital innovation to the heart of government by using the sandbox for the launch of DIGIT – we intend to issue a digitally native government bond to deliver two key aims: both exploring how DLT can be applied to our debt issuance process and to catalyse the development of digital markets, putting the UK firmly at the centre of global markets.”
As noted by the report, DIGIT will be launched on a platform inside the Digital Securities Sandbox (DSS). It was established in 2024 by the Bank of England and the Financial Conduct Authority.
Notably, the Sandbox is a virtual space where new financial technologies can be tested safely under regulatory supervision. This allows both companies and authorities to experiment and learn before rolling out broader market use.
UK Joins Global Push Toward Blockchain Gilts
By testing a blockchain-based government bond, the UK is following other governments and institutions that have already adopted the plan. Countries such as Hong Kong, the Philippines, and Thailand have issued digital bonds, while cities like Lugano in Switzerland and Quincy in the US have also experimented with similar projects.
On the global level, institutions like the World Bank and the European Investment Bank have been early leaders in this space. Rigby noted,
“We must go further than digital issuances that have taken place across the world already, and that is why we’re looking to deliver an ambitious set of features, including on-chain [on blockchain] settlement, supporting interoperability, over-the-counter trading, and we’ll be working with industry and the digital markets champion to explore collateral mobility and secondary market trading.”
It is worth noting that this development comes on the heels of Lloyds Bank and Archax’s purchase of the UK’s first tokenized gilt purchase. As Times of Blockchain reported previously, these platforms leveraged the Canton Network’s blockchain technology to facilitate the issuance of tokenized deposits and used them for the blockchain gilt purchases.
