US Treasury Financing via USDC on Tradeweb: A Blockchain Milestone

Digital Asset and a group of financial institutions have completed an on-chain financing transaction involving US Treasury securities against USDC on the Canton Network, executed on Tradeweb. The transaction aimed to provide continuous liquidity and remove restrictions associated with off-ledger cash and market-hour limitations. The firms said the work represents an initial activation for the broader Canton Network Working Group, which includes traditional financial institutions and digital asset market participants.

Digital Asset, in collaboration with a consortium of leading financial institutions, has successfully completed a groundbreaking transaction on the Canton Network. The transaction involved real-time, fully on-chain financing of U.S. Treasuries (UST) against USDC, marking a significant milestone in the evolution of capital markets.

The transaction, executed on Tradeweb, surpasses prior on-chain repo activities by providing near-instant, atomic settlement on a public blockchain, outside of traditional market hours, and on weekends. This achievement underscores the potential of blockchain technology to revolutionize financial markets by offering true 24/7 liquidity and eliminating the limitations of off-ledger cash and market-hour restrictions seen in legacy implementations.

Key participants in the working group focused on advancing on-chain initiatives include: Bank of America, Circle, Citadel, Cumberland DRW, Digital Asset, The Depository Trust & Clearing Corporation (DTCC), Hidden Road, Societe Generale, Tradeweb, and Virtu Financial. This milestone marks a foundational step towards building a capital markets infrastructure where high-quality liquid assets, such as UST, are available and usable at all times, regardless of traditional market hours or legacy settlement constraints.

The transaction demonstrated several key highlights:
1. On Chain Real-World Assets (RWAs): Prime brokers held client UST in custodied accounts at a DTCC subsidiary, The Depository Trust Company (DTC), and enabled their clients to create on-chain UST on the Canton Network, unlocking their utility as freely transferable collateral.
2. Native On-Chain Stablecoin Liquidity: USDC was minted and redeemed on the Canton Network specifically to demonstrate this use case while supporting near-instant liquidity and atomic settlement.
3. Round-the-Clock Financing: The transaction occurred on a Saturday, demonstrating the ability to access financing outside traditional global settlement windows.
4. Industry Collaboration Beyond Individual Trades: This transaction represents a foundational activation for the broader Canton Network Working Group, encompassing traditional financial institutions and digital asset market participants.

Market participants were able to leverage Tradeweb’s leading execution capabilities to complete this pioneering transaction, demonstrating access to deep liquidity, operational efficiency, and seamless integration necessary to complete a fully on-chain U.S. Treasury repo trade in real time. Institutional investors were able to access automated financing outside of market hours, setting a new industry standard for 24/7 global trading access.

The trade, which was conducted entirely on-chain with atomic settlement, was executed without disclosing individual role allocations to respect confidentiality and highlight the collective contribution of multiple members of the broader working group. Additional transactions are targeted for later this year.

Justin Peterson, Chief Technology Officer at Tradeweb, commented, “The successful completion of this transaction marks a significant step toward 24/7 trading in these markets. Tradeweb’s deep U.S. Treasury liquidity and electronic execution capabilities, combined with the Canton Network’s interoperable and decentralized framework, enabled this trade to happen outside of traditional settlement windows. It’s an industry first and reflects the power of collaboration in building a more connected, resilient, and always-on global capital market ecosystem.”

Kash Razzaghi, Chief Business Officer at Circle, added, “This transaction marks a significant advancement in the evolution of capital markets infrastructure. The successful use of tokenized U.S. Treasuries and on-chain settlement via USDC underscores the power of collaborative innovation across traditional and digital financial institutions.”

The successful execution of this transaction highlights the potential of blockchain technology to modernize financial operations and enhance market efficiency. As the financial industry continues to explore the applications of blockchain, this milestone serves as a foundational step in the broader adoption of digital assets and on-chain financing.

References:
[1] https://www.marketsmedia.com/first-real-time-on-chain-financing-of-treasuries-executed/
[2] https://www.ainvest.com/news/creatd-ceo-joins-blue-gold-advisory-board-expanding-digital-asset-presence-2508/