Regulated tokenized US Treasurys are coming on-chain, just not in the US

On-chain access to US Treasurys have received a lot of interest from LatAm countries

article-image

Deacons docs/Shutterstock modified by Blockworks

share

Digital asset liquidity provider Enigma Securities has partnered with Circle-backed tech company OpenTrade to bring US Treasury bill-backed yield products on-chain.

This product will be available to Enigma’s institutional clients through their existing OTC (over-the-counter) trading desk set-up. 

According to Jeff Handler, the chief commercial officer and co-founder of OpenTrade, the estimated annualized yield for these real-world asset (RWA) backed products will be between 4.5% to 5%.

“This allows Enigma’s clients to unlock this stable, predictable yield on otherwise idle USDC balances without any additional onboarding requirements, and using the exact same methods they use to transact with Enigma today,” Handler said.

Read more: Tokenized short-term US Treasury ETF coming to Base

According to Handler, transactions for these products will be conducted as fixed-term, fixed-rate (based on the term and rate of the T-bills) secure loans in USDC, to the Open Trade Special Purpose Company facilitated entirely by Enigma. 

“The OpenTrade SPV has been established for the sole purpose of processing these secured loans, which will include buying, custodying and selling the underlying assets backing the loans to financial institution counterparties.”

“The structure is entirely bankruptcy remote, and Enigma clients are always fully secured by the assets backing these secured loans,” Handler said. 

Handler believes that it is important to have regulated offerings of crypto assets for clients, as it offers customers legal protection. 

“Our clients can trust in the fact that the solution is maintained by a regulated financial services firm that is legally required to act in clients’ best interest across all aspects of our services,” he said.

Enigma Securities will not be the first company to offer tokenized US T-bills to its clients. Information compiled by rwa.xyz shows that the total tokenized treasury product market has reached over $858 million, with Franklin Templeton’s Benji product, which uses the Stellar blockchain, being far and away the largest at $331 million.

A growing interest in RWA across LatAm 

These latest RWA-backed products will be available to Enigma’s client base across Europe, Latin America and Asia. US investors will not be able to purchase these offerings.

According to Handler, Latin American clients have shown particularly high interest in yield products backed by RWAs.

Read more: Survey: More than half of Latin Americans have paid with crypto

He believes this is likely a function of the demand for USD-denominated financial assets that can provide stable and predictable returns, noting that local currencies in LatAm countries have historically been subject to high amounts of volatility, limiting their ability to save and accumulate wealth.

“The ability to store value in USD and accumulate value by investing that USD into high-quality assets like US Treasury bills is truly a step change for individuals and businesses in this region,” Handler said.

Read more: Tokenized US Treasury bills are entering emerging markets

Additionally, he notes that these investments are extremely limited in the traditional finance sector across LatAm for both businesses and individuals. 

“In this environment, the Enigma and OpenTrade solution is able to unlock access to these,” he said.

Updated Jan. 10, 2023 at 4:21 pm ET: A previous version of this article stated that the Enigma OTC company, rather than OpenTrade SPV, was responsible for processing secure loans.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral

article-image

Sponsored

Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM

article-image

The side events were the places to be at Consensus 2024, according to attendees

article-image

Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them

article-image

I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right

article-image

Also, the ETF hype train can count out at least one member