In the given case - you want to bind communication to a given confidential compute instance, which means you want to be able to ensure that the communication is

In the given case - you want to bind communication to a given confidential compute instance, which means you want to be able to ensure that the communication is coming from within the confidential compute instance, which means you want to be able to prove that the private key is only accessible from within that instance. An HSM buys you nothing more there.