UK digital bond plans hinge on one missing piece: onchain cash Experts say Britain’s digital gilt pilot can unlock trapped liquidity in financial markets only if regulators approve an onchain stablecoin. – Britain’s plan to issue its first tokenized sovereign bond by early 2027…
nges on solving on-chain cash settlement, a problem that has impeded institutional use of digital bonds for years. – Industry experts say the initiative likely has enough backing from the Treasury, Bank of England and regulators to survive recent political upheaval, and could boost demand for U.K. debt. – Progress is constrained by the absence of standardized onchain payment methods, robust sterling stablecoins and regulatory clarity. The success of Britain’s planned tokenized sovereign debt market relies entirely on resolving onchain cash settlement, an issue that has stalled institutional adoption of digital bonds for nearly seven years, industry experts told CoinDesk
While the U.K. government is targeting early 2027 to test its first blockchain-based bond issuance via HSBC and the London Stock Exchange Group, experts said that infrastructure pilots alone will not create a functioning capital market. The pilot comes just as 10 Downing Street has a new tenant. The digital bond initiative was announced by then-Chancellor of the Exchequer Rachel Reeves immediately before Prime Minister Keir Starmer resigned, clearing the way for Andy Burnham to take office on July 20 and replace Reeves with John Healey.
This leadership turnover comes as the U.K. carries nearly 3 trillion pounds ($4 trillion) in outstanding debt, raising questions about whether the incoming administration will alter the course of wholesale market modernization. While the Treasury did not respond to a CoinDesk email asking whether anything would change, Varun Paul, the global business lead for central banks and financial market infrastructure at Fireblocks, said the project probably has enough institutional backing that it…