tZERO Group, Inc., a tokenization infrastructure leader, announced today that USDM1, a USD-denominated sovereign bond issued natively on-chain by the Republic of the Marshall Islands (RMI), can now be held through tZERO Digital Asset Securities, LLC, an SEC-registered broker-dealer custodian of digital assets. This development enables institutional participants to securely hold tokenized sovereign debt within a regulated framework aligned with U.S. securities laws.
USDM1 is a natively issued, USD-denominated sovereign debt security backed 1:1 by pledged short-duration U.S. Treasury instruments. Each unit represents a direct interest in secured sovereign debt issued under New York law, structured in the style of a Brady bond, with an explicit customary waiver of sovereign immunity. Cleary Gottlieb advised the RMI as issuer’s counsel. The instrument combines the legal protections of traditional fixed income with the efficiencies of tokenized assets, paying a coupon and potentially serving as a cash equivalent. Holders benefit from enforceable rights to par redemption against a sovereign issuer, with an independent U.S. trust company maintaining a perfected, first-priority security interest in the pledged Treasuries.
“USDM1 introduces a new category of on-chain sovereign collateral that aligns with how institutions manage custody, financing, and balance sheet efficiency,” said Alan Konevsky, Chairman of the Board and Chief Executive Officer of tZERO. “Supporting USDM1 within tZERO’s custody solution reflects our focus on expanding regulated access to digital assets that can integrate directly into institutional workflows for cash and treasury management.”
USDM1 is currently issued and supported across multiple blockchain networks, including Stellar, Canton and Solana, providing flexibility for institutional participants. As collateral, it benefits from robust U.S. close-out netting protections and supports sovereign look-through to Level 1 HQLA under Basel standards. The addition of USDM1 to tZERO’s platform extends its capabilities as a regulated infrastructure provider, enabling institutions to hold sovereign, Treasury-backed digital asset securities within an SEC-registered qualified custodian, integrate on-chain assets into existing custody and operational frameworks, and access digital asset securities designed for compatibility with margin, financing, and collateral workflows.
Looking ahead, tZERO expects to explore broader infrastructure interoperability with USDM1 across its regulated ecosystem and broader DeFi use cases. This may include expanding availability to tZERO’s existing institutional client base, further integration with tZERO’s SEC- and FINRA-regulated broker-dealer capabilities, compatibility with tZERO’s clearing infrastructure and forthcoming derivatives framework, and API-level connectivity through tZERO Connect. Over time, the parties also expect to evaluate pathways for USDM1 to function as both a trading and funding instrument within regulated secondary market environments, including exploring access to liquidity through tZERO’s regulated alternative trading system.
USDM1 has been engineered to function within familiar broker-dealer custody and secured financing frameworks, offering a pathway for institutions to hold yield-bearing, Treasury-collateralized instruments in regulated custody environments while maintaining 24/7 on-chain settlement capabilities. This announcement reflects continued momentum in bridging traditional financial infrastructure with blockchain-based assets, as institutions increasingly seek regulated pathways to access tokenized securities and on-chain collateral.
For more information about tZERO, visit their website. Additional details on USDM1 can be found in the government’s white-paper.
