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The United Kingdom’s City Minister, Tulip Siddiq, championed the introduction of blockchain-powered government bonds known as gilts. Despite backlash from the UK Debt Management Office, Siddiq continued to push the agenda. The office raised concerns over the feasibility and readiness of the implementation.
Tulip Siddiq argues that pushing government-issued bonds on blockchain technology could modernize the financial markets in the jurisdiction and allow the United Kingdom to compete internationally.
The Debt Management Office (DMO), the executive agency of the UK government Treasury, opposed the move, citing concerns about the feasibility and readiness of the implementation. Traditional bond issuance began with the submission of paper.&nbsp;
Technology modernized the trading process by incorporating electronic means. The current UK reforms could migrate the asset class to the blockchain ecosphere.
<h3 id="span-style-font-weight-400-tulip-siddiq-faces-backlash-from-dmo-for-pushing-blockchain-powered-bonds-span">Tulip Siddiq faces backlash from DMO for pushing blockchain-powered bonds</h3>
One Treasury official told a media outlet that the proposal had faced backlash, but Tulip didn’t see any valid reason why the technology implementation should not be rolled out.
<blockquote>
 “There has been some resistance to change, but Tulip doesn’t see any concrete reason why this shouldn’t happen.”
 Treasury Official
</blockquote>
The DMO confirmed that it welcomes and embraces technology and associated innovations and will continue to observe progress in the field despite resistance. The department also noted that it had involved other players in the HM Treasury and initiated dialogue with industry participants. Issuing digital bonds or gilts through ledger technology will introduce a new government utility for blockchain technology.
Those supporting the motion claim that the technology can enhance efficiency in the bond market. Many also argue that the reform will cut the costs often incurred when trading bonds through modern electronic means by eradicating middlemen and intermediaries. The digital bonds will also enhance transparency over the ultimate beneficial owners of the bonds.
The United Kingdom’s Treasury has investigated digital gilt possibilities for the past two years. In April 2022, former Conservative City Minister John Glen spoke publicly about the idea during Boris Johnson’s administration. Public information concerning the rollout progress has been minute since then.
<h3 id="span-style-font-weight-400-asia-pioneers-the-first-multi-currency-blockchain-government-bond-span">Asia pioneers the first multi-currency blockchain government bond</h3>
Digital bonds have also created a buzz in Asia. On 7th February, the Hong Kong Special Administrative Region (SAR) issued a multi-currency blockchain-based bond equivalent to $766.8 million.&nbsp;
The bond was divided into four different currencies: the Hong Kong dollar (HK$), the US dollar ($), the offshore Chinese yuan (CNH), and the euro (€). Investors across the four currency markets flooded the bond, with the final issuance size exceeding the initial expectation of $300 million. These investors include asset managers, banking institutions, insurance firms, private banks, and non-financial institutions.
The news of the reforms comes just after the UK general elections in July, which saw the country’s Labour Party defeat the Conservative party that has been reigning for the past 14 years. The victory renewed crypto optimism that was dwindling under the Conservative Party regime.&nbsp;
CryptoUK, the self-regulatory trade association for the UK crypto-asset industry, said it had a good relationship with the Labour MPs and policymakers and had clear intentions to strengthen the bond to push for crypto and digital asset advancements in the United Kingdom.

The UK’s City Minister pushes for blockchain gilts despite backlash from the DMO

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