Luxembourg issues government's first digital treasury certificates issuance using DLT

On June 18, the Luxembourg state treasury successfully placed a EUR50 million on-chain treasury certificates issue with private investors. The treasury certificates carry a six-month maturity and price at an equivalent spread of six-month Euribor minus ten basis points.

This issuance marks a significant milestone in the evolution of sovereign debt markets, as Luxembourg becomes one of the first European governments to issue treasury certificates natively on a blockchain platform. The first such issuance in the EU was conducted by Slovenia in July 2024.

The transaction underscores the growing momentum behind digital securities and the increasing adoption of DLT in public sector financing. It also highlights the pioneering role of Luxembourg’s blockchain legislation in enabling innovation in digital asset and capital markets.

The digital treasury certificates were issued and documented using HSBC Orion, HSBC's digital asset platform. HSBC Orion has a track record of facilitating significant capital markets issuances, such as the European Investment Bank's inaugural bond under the Eurosystem's exploration of new technologies for wholesale central bank money settlement in November 2024. In Luxembourg, HSBC Orion is constructed to align with the two-tier account structure mandated by the Luxembourg DLT regime, with HSBC serving as the central account keeper.

This transaction was led from Luxembourg by A&O Shearman partner Frank Mausen and counsel Philippe Noeltner, with support from senior associate Roman Mazhorov.