Nonco Expands Institutional Collateral Toolkit from Tokenized Money Market Funds to Secured Sovereign Debt
RWA Signal Insight
U.S. TreasuriesInstitutional digital asset firm Nonco has expanded its collateral toolkit by integrating USDM1, a natively issued, secured sovereign bond, into its derivatives, financing, and trading operations. Unlike tokenized money market funds or payment stablecoins, USDM1 provides holders with enforceable rights to par redemption against a sovereign issuer and a first-priority security interest in U.S. Treasury collateral. This integration allows institutional counterparties to utilize the asset for margin and liquidity management across 24/7 onchain markets. Nonco, which has processed over $100 billion in OTC trading volume, previously pioneered the use of tokenized fund shares like Superstate’s USTB as collateral. The adoption of USDM1 highlights a shift toward using diverse, high-quality onchain assets that align with traditional legal frameworks like ISDA and GMRA documentation. By leveraging a bankruptcy-remote structure governed by New York law, USDM1 offers institutional firms greater financing flexibility and optimized balance sheet capacity. This development underscores the maturation of onchain collateral, where specific legal and economic characteristics determine an asset's utility in institutional financing.
Key points
- Nonco integrated USDM1, a sovereign bond secured by U.S. Treasuries, as institutional collateral.
- USDM1 provides dual-recourse rights and is compatible with ISDA, GMRA, and GMSLA documentation.
- Nonco has surpassed $100 billion in OTC trading volume with over 900 institutional counterparties.
- USDM1 recently facilitated the first fully onchain repo transaction with Virtu Financial via Tradeweb.
Background
USDM1 is a USD-denominated sovereign bond issued by M1X Global that is secured 1:1 by short-dated U.S. Treasuries. It is structured to provide institutional investors with the legal protections of a perfected security interest under the Uniform Commercial Code, distinguishing it from standard stablecoins or investment fund tokens.