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Crypto and finance companies form alliance to promote blockchain-based treasury trading
If you’ve been in the crypto industry for a while, you’ll know about some supposedly killer applications for blockchain that are on the horizon, but never really happen. One way is to place “real-world assets” (RWA in crypto-speak) on a blockchain, believed to usher in a new era of cheaper and more convenient asset management. The idea, which has been floated in one form or another for a decade, as “real estate on the blockchain” or “Apple shares on blockchain” – is a good idea, but no one knows how to make it take off. Now a new outfit called the Superstate Industry Council is committed to making it finally work, starting with blockchain-based trading of U.S. Treasuries.
The consultancy is anchored by Superstate, a startup founded by Robert Leshner, a former bond specialist who launched the successful DeFi platform known as Compound. Other members include around 20 well-established names in crypto, including Uniswap and CoinFund, as well as a handful of companies from the traditional banking sector that have yet to be named. The idea is for council members to act as ambassadors to Wall Street, advocating for trading Treasuries and other financial instruments in the form of tokenized assets.
Again, this is not a new idea. Every month or so I get a press release saying that some major bank or other has just made a transaction involving tokenized versions of some popular commodity or stock or other. But this only goes so far since not everyone uses the same blockchain plumbing to make these transactions and, in any case, there is not enough liquidity to make it worth it, especially that the old system seems to manage trillions of dollars. assets dollars just fine.
I confided all this to Leshner, whose Superstate now almost 40 million dollars US Treasuries traded as blockchain assets on its platform. Leshner was quick to admit that, for now at least, traditional investors have little interest in trading tokenized assets. But he argued that it would become more widespread for the simple reason that blockchain is simply a superior technology for moving assets: not only is it cheap and secure, but it is programmable. This means that beyond buying or selling a Treasury bond, it is possible to provide a complex series of instructions on how to manage the Treasury in the future, including in the event of a unforeseen events, all on the blockchain.
Leshner is realistic about what it will take to get more traditional firms to trade Treasuries and other assets on the blockchain. He says that instead of trying to leapfrog the existing financial stack, Superstate and some traditional firms like Franklin Templeton frame their service as a “bridge” between existing Wall Street technology and the future of blockchain. On this front, the new industry council will likely prove useful in persuading the old guard to try the new thing. Additionally, Leshner should not be underestimated as he is one of a handful of executives who have serious credibility in crypto and TradFi circles, and since his first startup, Compound, has been considered a premier brand order.
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Still, Leshner and his new board will need both patience and luck if they want to turn one of cryptocurrencies’ favorite use cases into an everyday reality. Let’s check back in a year and see if this long-awaited breakthrough actually happens this time.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
This story was originally featured on Fortune.com