Blockchain Helps Treasury Trades Move Beyond the Workweek

Is blockchain helping Wall Street trading break the confines of the workweek?

That reality could be on the horizon, Bloomberg reported Tuesday (Aug. 12), after a group of finance heavyweights used a cryptocurrency blockchain to trade U.S. Treasurys for digital dollars on a Saturday.

The trade was carried out on the Canton Network, a public blockchain, allowing a standard U.S. Treasury repurchase agreement — otherwise known as a repo trade — to be carried out outside of normal market hours, the report said.

“This is the first time a U.S. Treasury has been natively issued on-chain without the use of a broker-dealer intermediary,” DRW founder and CEO Don Wilson said, per the report. “You’re getting the value of 24/7 movement, without introducing additional counter-party risk.”

The group that helped coordinate the trade was a blend of traditional finance and digitally-native companies, including Bank of America, Citadel Securities, Circle Internet Group and Cumberland DRW, according to the report.

That’s in keeping with the transaction itself, the report said, taking a traditional asset class, U.S. Treasurys, and moving it to a digitally native blockchain.

For the transaction to succeed, Treasurys held at a Depository Trust and Clearing Corp. (DTCC) subsidiary were transformed into digital tokens and used as collateral to borrow USDC, Circle’s dollar-backed stablecoin. The trade was instantaneous, with both sides getting their assets at the same time, thus skirting typical market delays, according to the report.

DTCC is the central clearing and settlement hub for equities and fixed income products, per the report.

Chainalysis co-founder and CEO Jonathan Levin discussed the growing mainstream use of blockchain technology in an April interview with PYMNTS.

“Banks are in the state where they are thinking about blockchains as public infrastructure that they need to rely on,” Levin told PYMNTS CEO Karen Webster.

The adoption of stablecoins is one of the biggest shifts in blockchain use, at least since Chainalysis began in 2014. Hundreds of billions of dollars move across blockchains while being stored in traditional financial institutions.

“When we started the business in 2014, that wasn’t yet a concept,” he said. “Cryptocurrency only meant blockchains that had native cryptocurrency tokens. Today, people are putting all types of financial instruments on the blockchain, including the U.S. dollar.”