UK government unveils blueprint for DIGIT digital bond, aiming to disperse market infrastructure towards decentralization
The UK government has announced significant advancements in its digital bond issuance platform, DIGIT, as part of a broader digital strategy for wholesale financial markets. The latest update, unveiled on 15 July 2025, outlines the key priorities being tested in the DIGIT pilot program.
At the heart of the strategy is the focus on on-chain settlement, enabling DIGIT bonds to be settled directly on a DLT platform, including the cash leg of transactions. This approach aims to test the full issuance lifecycle with settlement executed on-chain for greater efficiency and automation.
The pilot program is also exploring the use of smart contracts to facilitate over-the-counter trades between counterparties on the DLT platform. This functionality is crucial for establishing an active market and testing how DLT-based settlement compares to traditional fixed income markets.
Recognising the importance of interoperability, the UK government plans to collaborate with industry participants, platform providers, and existing market infrastructure to ensure seamless integration. The goal is to support access to DIGIT for investors operating in both traditional and DLT-based markets, fostering market integration.
Improvements in collateral mobility and secondary market trading capabilities are also expected, enabled by DLT. These enhancements can provide greater flexibility and transparency in trading and collateralization.
The government is also committed to harnessing the inherent transparency benefits of DLT platforms to deliver visibility of securities ownership and transactions beyond what current infrastructure offers.
In addition to DIGIT, the UK government's digital strategy for wholesale markets includes a commitment to being open to completely new models, including decentralized solutions for payments, trading, clearing, settlement, and reporting. The strategy also includes a commitment to moving beyond testing tokenized asset solutions and actually rolling them out and scaling them up.
The role of the newly appointed Digital Markets Champion will focus on delivering the UK government's ambitious agenda for wholesale markets. Furthermore, the Digital Securities Sandbox, previously prohibiting stablecoins for settlement purposes, is now open to exploring their inclusion alongside tokenized deposits.
These developments underscore the UK government's commitment to fostering the growth of UK-based DLT infrastructure and encouraging wider adoption of DLT in UK financial markets by demonstrating practical applications in government bond issuance and trading.
- The government's digital strategy for wholesale markets also includes a commitment to moving beyond testing tokenized asset solutions and actually scaling up the use of stablecoins, such as stablecoins for settlement purposes, in addition to decentralized solutions for payments, trading, clearing, and reporting.
- In the pilot program for DIGIT, the UK government is exploring the use of smart contracts to facilitate over-the-counter trades between counterparties on the blockchain platform, which could potentially include stablecoins for settlement, thus enabling greater efficiency and automation.
- As the UK government continues to harness the benefits of blockchain technology, they aim to collaborate with industry participants and platform providers, including those specializing in stablecoins, to ensure seamless integration, improve collateral mobility, and enhance secondary market trading capabilities in both traditional markets and DLT-based markets.
