UK Tokenized Government Bond Plan Advances, On-Chain Cash Settlement Becomes Key Bottleneck

TechFlow news, July 22, according to CoinDesk, the UK government plans to complete the first batch of tokenized sovereign bond issuance tests via HSBC and London Stock Exchange Group (LSEG) in early 2027, but industry experts point out that on-chain cash settlement issues remain the core obstacle restricting the implementation of the plan.

Fireblocks Head of Global Business for Central Banks and Market Infrastructure Varun Paul stated that the project has received sufficient institutional support, a change of government (UK Prime Minister changed from Keir Starmer to Andy Burnham) is unlikely to reverse it, and tokenized government bonds are expected to boost market demand under the UK's current debt scale of nearly 3 trillion pounds (about 4 trillion US dollars).

Markets Evolution Founder Jannah Patchay pointed out that tokenized bond technology has been verified for nearly seven years since Santander Bank issued the first tokenized sterling corporate bond in 2019, but the lack of on-chain counterparty risk-free settlement assets has remained unresolved. She called on regulators to promote the use of compliant sterling stablecoins to provide an on-chain settlement mechanism. Currently, the global stablecoin market size reaches 300 billion US dollars, but the largest sterling stablecoin by market cap, TGBP, is only about 34.2 million US dollars, accounting for a very small proportion.