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, 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 waiver of sovereign immunity. Cleary Gottlieb advised the RMI as issuer’s counsel. The instrument combines legal protections of traditional fixed income with blockchain settlement efficiencies, pays a coupon, and may be treated as a cash equivalent. Holders benefit from enforceable rights to par redemption against a sovereign issuer alongside an independent U.S. trust company maintaining a perfected, first-priority security interest in pledged U.S. 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 and CEO 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 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 extends tZERO’s 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 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 DeFi use cases. This may include expanding availability to tZERO’s institutional client base, further integration with its SEC- and FINRA-regulated broker-dealer capabilities, compatibility with clearing infrastructure and forthcoming derivatives framework, and API-level connectivity through tZERO Connect for institutional participants. 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.
For more information about USDM1, see the government’s white-paper “Financial Access and the Path to USDM1” available on the Republic of the Marshall Islands website. tZERO Group, Inc. and its broker-dealer subsidiaries provide an innovative liquidity platform for private companies and assets. All technology services are offered through tZERO Technologies, LLC. For more information, visit their website.
