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 access regulated custody solutions for tokenized securities and other digital assets within a 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 legal protections of traditional fixed income with settlement efficiencies of tokenized assets, paying a coupon and potentially treated as a cash equivalent. Holders benefit from enforceable rights to par redemption and a first-priority security interest in 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 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.”
USDM1 is currently issued across multiple blockchains, including Stellar, Canton, and Solana, offering flexibility. As collateral, it benefits from U.S. close-out netting protections and supports sovereign look-through to Level 1 HQLA under Basel standards. This addition extends tZERO's capabilities as a regulated infrastructure provider, enabling institutions to hold sovereign, Treasury-backed digital asset securities within an SEC-registered custodian, integrate on-chain assets into existing frameworks, and access assets designed for margin and financing workflows.
Looking ahead, tZERO expects to explore broader interoperability, including expanding availability to its institutional client base, integration with its broker-dealer capabilities, clearing infrastructure, and API-level connectivity through tZERO Connect. Over time, parties may evaluate pathways for USDM1 to function as a trading and funding instrument within regulated secondary markets, including access to liquidity through tZERO's alternative trading system.
This announcement reflects continued momentum in bridging traditional financial infrastructure with blockchain-based assets, as institutions seek regulated pathways to tokenized securities and on-chain collateral. For more information about USDM1, see the RMI government's white-paper “Financial Access and the Path to USDM1.”
