Host: Virtu Financial, Tradeweb and M1X Global have completed the world's first fully on-chain repo transaction using USDM1, and this is a US Treasury-backed digital sovereign bond issued by the Republic of the Marshall Islands. Now executed on the Canton Network, the entire repo life cycle is settled atomically in under 10 minutes. Well, joining us at the New York Stock Exchange to break down this milestone and also the future of digital collateral is Jordan Goldman, president and CEO of M1X Global. Jordan, great to have you here. Thank you so much for joining me.
Jordan Goldman: Great to be here.
Host: Well, first and foremost, tell us about the significance of this.
Jordan Goldman: So traditional repos have settlement cycles that are T1, T2, and settlement cycles cost. So the longer it takes, there's counterparty risk, there's settlement exposure. This looked very much on the surface like a traditional repo transaction. So you had a regulated market maker in the form of Virtu Financial, you had Tradeweb as regulated post-trade infrastructure, and you had a sovereign bond functioning as collateral. But the difference here is the sovereign bond was USDM1. So USDM1 is the world's first natively issued sovereign bond that is issued on the blockchain. So it's a USD-denominated sovereign exposure. It's a form factor structured in the style of a Brady bond by Cleary Gottlieb, so it's secured one-to-one by US Treasuries, and this structure was able to work within a conventional GMRA agreement. And it was able to work through these regulated counterparties, and I think that's the piece of it that's so significant. Even though it occurred entirely on blockchain, even though a repo cycle was able to occur in under 10 minutes, it's a modernization of existing structures. It doesn't require entirely new instruments or entirely new—it fits within what the system is intended to accommodate. So when you have a repo that can complete in under 10 minutes, that allows you to do different things with the collateral. It allows you to have more efficient, like, precision liquidity management.
Host: Yeah, and Jordan, while I have you here, when we think about where we are in the second half of 2026, it's no longer the conversation about the intersection of DeFi as well as TradFi, especially on the heels of all the geopolitical volatility we saw this year, because we're not looking at just Monday through Friday trading. We're looking at a 24/7 cycle here. So what does this actually mean for institutions?
Jordan Goldman: I think there's different forms of instruments in the blockchain, and at first tokenization was what can you put there, but it's starting to become what can you actually do with it. So if you look at, like, a stablecoin, it's effectively an unsecured corporate exposure. And when you look at a tokenized money market fund, that's a fund share. This is the first instance where what the instrument is, is secured sovereign debt. And secured sovereign debt has a place in capital markets infrastructure. Like, that's traditionally what you've used as collateral. And then in an instance like this, even though it takes place, the technology occurs on the blockchain, it doesn't change the legal nature of the instrument. It doesn't change your rights profile as a holder, it doesn't change its capital and its balance sheet treatment. So that means you can start to compress—you can introduce new market efficiencies in the context of current market structure.
Host: Yeah, and I do want to zoom in on USDM1. So from the Marshall Islands to Wall Street, what is happening?
Jordan Goldman: So, the Marshall Islands is a sovereign nation. It's in a Compact of Free Association with the United States. It exclusively uses the US dollar standard. It's 1,200 islands spread across an ocean area roughly the size of Mexico. They've, like a lot of countries in the Pacific, had some issues with correspondent banking pulling out. And the government needed a more efficient way to distribute aid to citizens, so they built USDM1. Like, they are the issuer of USDM1, and they structured it in this Brady bond format, which has 40 years of precedent. There have been hundreds of billions of dollars of Brady bonds issued, and it's effectively a USD-denominated sovereign exposure that is issued under New York law with an explicit waiver of sovereign immunity, and it's secured one-to-one by Treasuries held by a US trust company. So it's a bankruptcy-remote structure, and holders have a first-priority perfected security interest in the Treasuries under UCC 8 and 9. So that structure is really—it's a New York law instrument that is not only for people in the Marshall Islands. Like, not only does this allow the instrument to be secure, it's also compatible with institutional capital markets. So this transaction kind of demonstrates it's compatible with GMRA agreements. It maintains title transfer in title-transfer repo. It is eligible for legal close-out netting sets in a repo transaction. It does everything a sovereign bond can do traditionally. It's just issued and settled on the blockchain. So it introduces an efficiency that domestically allows them to distribute aid. It also introduces efficiencies that in capital markets lets you do more with this secured sovereign bond structure.
Host: And of course, when we're talking about the digital asset space, whether we're talking about actual assets or even technologies or use cases, we know that there are a lot of sandbox pilots. So when it comes to the biggest hurdle, when we're talking about what it will take for mass adoption, what do you think is the biggest hurdle here?
Jordan Goldman: I think we've been going through with USDM1 just a very controlled and structured process for its form factor to be tested, stage by stage. So it's been used for aid distribution within the context of the Marshall Islands. It's accepted by FDIC-insured Bank of Guam. It was then used earlier, late last year, in pilots on the Canton Network. It was used in the DTCC industry working groups. It was used in ISDA's US tokenization sandbox, which was powered by Onea. And then from a custody perspective, this is already accepted as qualified custody by Anchorage Digital Bank, by BitGo Bank and Trust. T-Zero's SEC-FINRA-regulated broker-dealer custodian accepts USDM1. It's now available through Tradeweb. There's also STS Digital, which is our principal derivatives dealer, is accepting it as collateral and is pledging it across its own OTC and structured product and financing books. So I'd say this has kind of been an evolution of: can a sovereign bond be issued on the blockchain? Can its structure be tested across regulated intermediaries and consistently pass those tests? And now we're moving into the phase of what does that form factor enable you to do with it. So this repo transaction shows it can be financed. It can also be used as derivatives collateral. It can also be used for other forms of secured financing transactions. So that moves the blockchain into not just, is there an instrument on-chain, but what form of collateral utility does that have and how does that introduce efficiencies in traditional markets?
Host: And finally, Jordan, before I let you go, you are obviously deeply entrenched in the space and have many conversations with stakeholders. So what can we realistically expect in both institution as well as retail as we head into 2027?
Jordan Goldman: I think regulatory—the market is converging on a new regulated structure, and I think there's institutions in traditional finance that are looking at this as, this is an efficiency improvement. I can interact with it. Like, I could be a highly regulated player like Tradeweb or like Virtu Financial, and I can start to use the blockchain as something that can derive economic benefits through—like, it doesn't have to be that everything transitions to 24/7. It could be that it's the right tool for the right job at the right time, and T0 24/7 settlement, if I'm trying to move my collateral all over the world, this lets me do that in an effective and efficient way that I can choose to tap into and start to integrate into my operations.
Host: Well, Jordan, a lot of moving parts here, so thank you so much for simplifying and breaking it all down for our viewers out there. Appreciate your time.
Jordan Goldman: Thank you.
