Virtu Financial has completed what is believed to be the first fully onchain repurchase agreement using a natively issued sovereign digital bond as collateral, eliminating the need for prime broker intermediation.

The transaction, executed on the Canton network with Tradeweb and M1X Global, saw all elements of the repo — securities delivery, cash leg and return — settle atomically onchain. The full cycle, including execution and repurchase, completed in under ten minutes, a timeframe that would be impossible under conventional T+1 settlement infrastructure.

The collateral used was USDM1, a sovereign bond issued by the Republic of the Marshall Islands and structured under New York law. The instrument is backed on a one-to-one basis by short-dated US Treasuries held in bankruptcy-remote custody, with holders maintaining a first-priority security interest in the collateral under the Uniform Commercial Code.

Previous onchain repo demonstrations have relied on digital cash instruments rather than sovereign securities collateral, or have held securities collateral off-chain. This transaction combined both elements for the first time.

USDM1 is classified as a UCC Article 8 investment security and is eligible for inclusion in ISDA and GMRA close-out netting sets. Under the Basel 3.1 standardised approach, it carries lower risk-weighted asset requirements than corporate stablecoins, tokenised money market fund shares or unrated digital asset exposures. Unlike digital cash instruments, it pays a coupon when posted as margin or collateral.

Institutional custody for the instrument is provided by Anchorage, BitGo and tZERO, with additional support from Bank of Guam.

The Marshall Islands operates exclusively on the US dollar standard under its Compact of Free Association with the United States, meaning the bond carries no foreign exchange or convertibility risk.

Cleary Gottlieb Steen & Hamilton served as issuer’s counsel on the structuring of USDM1.