Proponents say using a blockchain for these repos could unlock far more of the roughly $300 trillion in high-quality liquid assets as collateral by enabling real-time, around-the-clock settlement across borders.
A group of global financial firms completed the first cross-border, intraday repurchase agreement using tokenized U.K. government bonds on the Canton Network, a blockchain designed for institutions.
The transaction marks the first time digital versions of gilts, a $2-trillion market, have been used in an intraday repo across borders, according to a release shared with CoinDesk. It also includes the first cross-currency trade in which tokenized gilts were exchanged against tokenized deposits denominated in a currency other than the British pound.
In a repo, one party sells a security and agrees to buy it back later, often the same day. Banks and trading firms use these deals to raise short-term cash. By placing both the cash and the bond on a shared blockchain, the group aims to move collateral in real time rather than waiting for traditional market hours.
Participants in the latest round include LSEG, Euroclear, DTCC, Tradeweb, Citadel Securities and Societe Generale, along with digital asset firms such as Archax and Cumberland DRW. TreasurySpring embedded interest payments and risk terms directly into smart contracts tied to the trades.
The maneuver fits into Canton’s bigger ambition to make $300 trillion of global assets such as government bonds more useful as collateral by tokenizing them on a blockchain, Kelly Matheison, chief business development officer of Digital Assets, said in an interview with CoinDesk.
Digital Asset is the key development firm behind the Canton Network, and raised funds last year from financial heavyweights such as Goldman Sachs, DRW, Citadel Securities, BNY and Nasdaq.
“There are about $300 trillion of high-quality liquid assets around the globe,” Matheison said. “Yet only about 10%-11% of that — roughly $28 trillion — is used as collateral at any given time.”
The reason for that is timing. In traditional markets, firms must plan days ahead to move securities across borders, navigating settlement cycles, batch processing and market cut-off times.
“At a practical level, it restricts the amount of high-quality liquid assets that you can get in use at any point in time,” she said.
Using blockchain ledgers like Canton for these transactions allows counterparties to transfer ownership in real-time and around-the-clock, rather than waiting for batch settlement windows. That way, financial firms can use their balance sheets more efficiently and trade more, Mathieson said.
