On 18 March 2025, the Chancellor of the Exchequer, Rachel Reeves, met with a group of fintech CEOs and confirmed the next steps to test distributed ledger technology (DLT) in the UK gilt market. As part of those next steps, Ms Reeves announced details of the launch of the procurement process for the pilot Digital Gilt Instrument (DIGIT) issuance.

Background

At Mansion House in November 2024, the Chancellor announced the launch of the pilot DIGIT issuance, which would leverage cutting-edge DLT. That announcement was followed by a written statement to Parliament, setting out further details of the issuance and the Government’s commitment to engaging with the sector in 2025.

Additional information and engagement

HM Treasury (HMT) and the UK Debt Management Office (DMO) have now published additional information and engagement questions on DIGIT and announced a Preliminary Market Engagement Exercise through the contract finder service. HMT explains that these announcements represent the first step of the Government’s work with the sector towards achieving a successful DIGIT issuance.

Additional information

The DIGIT pilot is intended to enable the Government to explore how DLT can be applied to UK sovereign debt issuance processes, and to catalyse the development of UK based DLT infrastructure and the adoption of DLT across UK financial markets. HMT and the DMO explain that certain design decisions have already been taken in relation to DIGIT, including that it will be:

  • An entirely new, digitally native, UK Government debt instrument, held as a transferable security on a DLT platform.
  • Issued on a platform within the Digital Securities Sandbox (DSS), and it is expected that suppliers will need to obtain any necessary permissions from the Bank of England and Financial Conduct Authority to operate in the DSS before they will be eligible for selection under the associated procurement.
  • Short dated.
  • Separate from the Government’s debt issuance as it will be a real but experimental issuance.

HMT and the DMO also flag that, as the use of ‘unbacked cryptocurrencies’ or stablecoins is not within the scope of the DSS, these solutions will not be available for the purposes of the payment leg of any DIGIT transaction.

Engagement questions

The market engagement exercise is intended to allow the Government to understand the current landscape of services available, or in development, in the UK, and to gain insight into what potential investors want to see from a DIGIT issuance to help inform HMT’s commercial strategy.

Through the engagement questions, the HMT and the DMO are seeking to understand what technological options are available to facilitate an issuance, the scope of services that may need to be procured, investor preferences regarding a DIGIT issuance and how DIGIT can be designed to stimulate wider development and adoption of DLT infrastructure across UK capital markets. They include questions relating to the design of DIGIT (which are targeted at investors and the wider financial services industry), and questions regarding DLT platform features, data and security, and relevant experience (all of which are targeted primarily at firms interested in providing DLT services to the Government).

Next steps

Responses to the engagement questions are requested by 13 April 2025. HMT and the DMO explain that this is the first stage of the procurement process and will inform their thinking about what the optimal commercial strategy will look like. The next stage is expected to be to develop a statement of requirements that can be published as part of a tender pack and to develop their thinking on the procurement process that will be followed.

A tender notice is expected to be published, and Invitation to Tender issued, in late Spring 2025, with the successful supplier(s) being selected in late Summer 2025.