Luxembourg Treasury Issues 50 Million Euros in Bonds via HSBC Orion Blockchain Platform, Becoming the Second European Country to Use Distributed Ledger Technology.
The Luxembourg State Treasury has officially issued 50 million euros in digital treasury bonds through the HSBC Orion platform, marking an important step in applying Distributed Ledger Technology to the government bond market. This is the second European country to conduct a similar issuance after Slovenia's 30 million euros issuance in July of last year.
The bonds are listed on the Luxembourg Stock Exchange with a zero interest rate structure, sold at a 99.03% discount to par value but will be fully repaid after six months. The core innovation lies in the bonds being native digital assets, existing only on the blockchain instead of digital copies of traditional securities.
The distinction of terminology plays a crucial role in understanding this innovation. "Digital" bonds are issued natively on the blockchain, while "tokenized" bonds are typically digital copies of pre-existing securities. The native digital asset approach provides superior benefits in terms of issuance time, processing efficiency, and transparency.
Finance Minister Gilles Roth emphasized that this is evidence of their commitment to maintaining a technological leadership position in financial infrastructure. "It demonstrates the innovative power of Luxembourg's financial center and the effectiveness of the current blockchain legal framework, ensuring transaction traceability and verification, thereby enhancing investor confidence," he stated.
Pioneer Legal Framework and Continuous Innovation
Luxembourg has confirmed its leading position in DLT legal innovation with its first blockchain law in 2019 and multiple updates since then. The HSBC Orion platform is headquartered in Luxembourg and operates under its law, which is important considering Orion is also integrated with Hong Kong's securities depository center.
HSBC's choice of Luxembourg is understandable as many European digital bonds and tokenized funds apply Luxembourg law. HSBC previously organized two bond issuances for the European Investment Bank under Luxembourg law, demonstrating trust in this legal system.
Luxembourg's legal innovation allows blockchain to serve as an accurate record of securities ownership without mandatory use of traditional securities depository centers (CSD). The law introduced the concept of a "central account holder" instead of CSD, with HSBC being the first entity approved for this role.
Legal evolution continues beyond the traditional custody model. The Blockchain 4 law passed in December 2024 further expands to accommodate issuance on public blockchains, where investors can directly hold digital securities in personal wallets.
The new law introduces the role of a "sole control entity" responsible for maintaining the issuance account, tracking ownership chain, and reconciling issued securities. This borrows elements from Germany's eWpG Act, showing legal convergence in the region.
The two main coordinating issuance entities are HSBC Continental Europe and BGL BNP Paribas, with the issuance receiving significant investor interest. Luxembourg's Ministry of Finance views this as an important learning experience for future issuances.
