The banking crisis in March made it difficult for crypto-asset companies to access traditional banks, hindering the common and important business of securing deposits for surplus funds.
For one well-known start-up, the situation looks like a Trojan horse, the first step in the company’s ambitions to digitize the corporate bond market by introducing cash-equivalent financial instruments into the crypto space. It was a great chance.
Tokenize US Treasuries
Startup PV01 is co-founded by Max Boonen, whose name derives from bond terminology and who was also involved in founding giant cryptocurrency market maker B2C2. The first product is a tokenized 1-month US Treasury note.
U.S. Treasuries are among the world’s safest assets, and investors treat them on a par with the dollar. Tokenized U.S. Treasuries are what cryptocurrency companies are craving right now.
“It’s a cash management product,” “it’s not our end goal, but the demand is high,” said Boonen, a former rates trader at Goldman Sachs in London, in a recent interview.
“We are targeting probably many crypto-related companies that have difficulty moving money back and forth between the crypto world and the traditional financial system. , and those who are simply unable or unwilling to return to the traditional financial system.These are two very large segments.”
Target is corporate bonds
But PV01 eventually dreams of companies issuing bonds on the blockchain. The first effort to buy and tokenize US Treasuries is like a PoC (proof of concept). PV01’s long-term target is enterprises.
“The story goes back two years, and I thought, like stock tokens, bonds should be issued on the blockchain,” Boonen said. B2C2 is “second only to Genesis in lending, and it felt strange to see private two-company deals driving that position.”
And last year’s credit crunch, partly due to the failure of hedge fund Three Arrows Capital, was “made worse by the fact that no one knows who owes what. ”. On-chain bonds can solve that problem.
Recently, Maple Finance, a blockchain-based lending protocol, announced a money management product that also allows access to 1-month US Treasuries. Ondo Finance is also pioneering similar territory by launching a money market fund (MMF) backed stablecoin.
The lure of one-month US Treasury bonds is that the Federal Reserve’s interest rate hike has boosted yields to around 3.5%. “When interest rates were 0%, it was easy to do nothing. Just switch to a stablecoin and wait,” Boonen said. With PV01 tokenized bonds, customers can enjoy the benefits of high interest rates.
“To buy government bonds, you need dollars.
Despite dealing in US Treasuries, PV01 won’t be launching operations anytime soon in the US, where cryptocurrency regulation and oversight are tightening.
“We will only offer our products broadly in the United States when we can be sure our methods are legal. If we can’t, we won’t.”
｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
| Image: CoinDesk
｜Original: Crypto Trading Legend’s Next Move Is Bringing US Treasurys to Blockchains, With Plans for Corporate Bonds, Too