Tokenized short-term US Treasury ETF coming to Base

Only KYC’d customers who have passed anti-money laundering checks will be qualified to purchase the token

October 6, 2023 10:01 am

FotograFFF/Shutterstock modified by Blockworks

Backed Finance, a Swiss-based company that is looking to bring real-world assets on-chain, has issued blB01, a tokenized short-term US treasury bond ETF on Base, Coinbase’s layer-2 network.

The company claims this will be the first tokenized security to be available on Base and will be issued in compliance with Switzerland’s Distributed Ledger Technology (DLT) Act.

Under the DLT Act, all tokens must be fully collateralized and transferable across wallets, Backed Finance noted in a press release reviewed by Blockworks.

This means that for every token that is circulated, an equivalent number of the underlying asset is held by third-party custodians, Adam Levi, co-founder of Backed told Blockworks.

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“In the case of bIB01, the underlying asset is the iShares Treasury Bond 0-1yr UCITS ETF (IB01), which tracks the investment results of an index composed of US Dollar denominated government bonds issued by the US Treasury, with remaining maturities between zero and one year,” Levi said.

Levi adds that Backed is not affiliated with BlackRock and its token is not an iShares product.

Only qualified investors and licensed retailers that have been KYC’d by Backed and received anti-money laundering qualifications can purchase tokenized securities from Backed.

None of Backed’s financial assets are registered as US securities, and the company notes that it does not have any intentions to change this fact. This means that Backed’s tokens will only be available to persons outside of the United States.

The Backed team currently has nine tokenized products including tokenized equities and fixed income. According to data from DeFiLlama, the project currently boasts over $46 million in total value locked (TVL).

“We plan to bring more on-chain dependent on client demand — we have seen significant interest as our tokenization solution allows our clients to access these products without needing to interact with [traditional finance] directly themselves. If there is demand, we are happy to tokenize any security that is requested,” Levi said.

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