[Rise Community] Tokenized US Treasury bonds are entering emerging markets

A way to achieve sustainable gains has arrived in Southeast Asia.

Crypto asset management platform Finblox is bringing tokenized U.S. Treasuries to emerging markets in Southeast Asia.

The Singapore-based startup, which calls itself a “super app,” will partner with OpenEden to launch a smart contract vault that provides 24/7 access to tokenized treasury securities.

The product is planned to be available to customers in the Philippines, Indonesia, India and Vietnam.

Finblox CEO Peter Hoang told Blockworks that a large portion of the unbanked population lives in emerging markets. He said the partnership should provide a safer, less risky mechanism to deliver sustainable returns.

“Treasury bills are considered one of the safest assets on the planet,” Hoang said. “OpenEden, an institution recognized and licensed by the Monetary Authority of Singapore, aligns with our vision to democratize and build finance in a secure and transparent manner.”

Hoang said tokenized treasury bonds will provide international investors with the opportunity and flexibility to invest in safe and secure assets on a smaller scale.

OpenEden’s Treasury Vault will be integrated with Chainlink and will provide on-chain evidence that its tokens are backed by real assets.

“Through the OpenEden TBILL Vault, our partners can offer low-risk cash management products that can generate sustainable yields for users from U.S. Treasuries,” said OpenEden co-founder Eugene Ng in a statement.

Treasury tokens are non-transferable, but users can withdraw tokens from the vault after five days to avoid maturity mismatches.

“We saw a lot of players fall last year due to unsustainable practices. This created a lot of distrust across the crypto space… We believe [US Treasurys] will be one of the products that regains user trust over time,” he said.

There are still risks in holding tokenized Treasuries.

The first risk is government default, although the possibility is small. The second is smart contract risk.

“Typically 95% of assets are deployed, and only 5% is held in a vault for withdrawal, so that 5% is subject to smart contract risk,” he said.

Since Finblox is a regulated entity, it requires customers to complete two levels of regulation before being eligible to purchase treasury bonds: identity verification and proof of address.

“We determine deposit and withdrawal limits based on verification,” Hoang said.