tZERO Group, Inc., a tokenization infrastructure leader, announced 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 the tokenized security 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. The instrument combines legal protections of traditional fixed income with blockchain settlement efficiencies, paying a coupon and potentially treated 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 pledged Treasuries.
Alan Konevsky, Chairman and CEO of tZERO, stated that USDM1 introduces a new category of on-chain sovereign collateral that aligns with institutional custody, financing, and balance sheet efficiency needs. Supporting USDM1 within tZERO’s custody solution reflects the company’s focus on expanding regulated access to digital assets for cash and treasury management.
USDM1 is currently issued on multiple blockchain networks, including Stellar, Canton, and Solana, offering 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 to tZERO’s platform extends its capabilities as a regulated infrastructure provider, enabling institutions to hold sovereign, Treasury-backed digital assets within an SEC-registered qualified custodian, integrate on-chain assets into existing custody frameworks, and access digital assets designed for margin, financing, and collateral workflows.
Looking ahead, tZERO expects to explore broader infrastructure interoperability with USDM1 across its regulated ecosystem and DeFi use cases. This may include expanding availability to tZERO’s institutional clients, further integration with its SEC- and FINRA-regulated broker-dealer capabilities, compatibility with clearing infrastructure and forthcoming derivatives frameworks, 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 markets, including access to liquidity through tZERO’s alternative trading system.
USDM1 has been engineered to operate within familiar broker-dealer custody and secured financing frameworks, offering institutions a way to hold yield-bearing, Treasury-collateralized instruments in regulated custody while maintaining 24/7 on-chain settlement. This announcement reflects continued momentum in bridging traditional financial infrastructure with blockchain-based assets as institutions seek regulated pathways to tokenized securities. For more information on USDM1, see the government’s white-paper “Financial Access and the Path to USDM1” at newmediawire.com.
