Key Highlights
- The UK plans to issue digital gilts on HSBC’s blockchain, aiming for faster, cheaper, and more efficient bond trading.
- Tokenized real-world assets hit $20B this year, with big firms like BlackRock and Franklin Templeton driving adoption.
- Regulators crack down on unlicensed crypto, highlighting the need for safe, transparent blockchain finance globally.
The UK Treasury is modernizing its debt markets by issuing digital gilts on HSBC Holdings Plc’s blockchain platform. Known as DIGIT, these bonds will be tested within a regulated environment overseen by the Financial Conduct Authority (FCA).
As per Bloomberg, HSBC said issuing bonds on blockchain could speed up settlement times, reduce costs, and improve market efficiency. Chancellor Rachel Reeves projected in November 2024 that the UK could start issuing digital gilts within two years.
HSBC’s Orion platform, picked for the UK pilot, already has a strong track record. It has handled more than $3.5 billion in digital bonds around the world. For example, it supported the European Investment Bank’s first digital sterling bond in 2023 and a $1.3 billion green bond for the Hong Kong government last year. With this experience, the UK plans to use the platform to make its capital markets faster, simpler, and more modern.
Institutional momentum behind tokenized assets
The move by the UK is part of a rising global trend that sees traditional assets being converted into digital tokens. Indeed, the heavy financial investors are now investing billions in blockchain-based investment projects.
Industry data cited by RWA.io shows that tokenized real-world assets on public blockchains topped $20 billion this year, a 35% increase from last year. Not just banks, but also asset managers and insurance companies are getting involved, using these digital assets for actual investments—not just experiments.
Big financial institutions are taking the lead in this shift. BlackRock’s BUIDL fund grew from $615 million to $1.87 billion in just a year. Franklin Templeton even moved its money market fund onto blockchain, blending traditional finance with digital technology.
Meanwhile, banks and custodians are setting up new digital teams to explore creative uses for tokenized assets. Because of this, the UK’s digital gilts pilot fits right into the growing trend of serious institutional adoption of blockchain finance.
Regulatory pressure on digital exchanges
However, authorities are tightening oversight of crypto activities. The FCA recently started legal proceedings against HTX, formerly Huobi, for promoting crypto services without authorization. HTX reportedly continued advertising despite repeated warnings, operating under a complex structure that hides ownership.
In addition, the U.S. Treasury’s OFAC sanctioned two UK-based exchanges, Zedcex and Zedxion, for handling cryptocurrency transactions linked to Iran’s financial sector. Secretary Scott Bessent slammed these actions, saying, “Like rats on a sinking ship, the regime is frantically wiring funds stolen from Iranian families to banks around the world.”
These events highlight why having regulated and transparent blockchain systems is so important, both in the UK and globally.
Also Read: SEC Chairman Highlights Crypto Oversight Before House Committee