PV01, a start-up co-founded by Max Boonen, who also helped launch crypto market maker B2C2, has created tokenized, on-chain versions of one-month U.S. Treasury bills, bringing cash-like instruments to the cryptocurrency space. The move comes after the March banking crisis made it harder for crypto companies to access conventional banks, creating an opportunity for PV01. The company’s broader ambition is to digitize the conventional bond market, with the ultimate goal of getting corporations to issue bonds on a blockchain. PV01’s tokenized bills mean customers can benefit from yields of around 3.5% while still technically keeping their money in crypto.
PV01’s initial foray is a proof of concept for its broader ambition. Rather than finding a bond issuer, PV01 will purchase and then tokenize fixed-income products issued by the US government. Boonen believes on-chain bonds could solve the issues that arose during last year’s credit crunch, when no one knew who owned what debt and who owed what debt. PV01 is working with two brokers to secure the bills, which are then put in a special purpose vehicle. Despite being US-issued debt, PV01 won’t immediately operate in the US, where regulation and scrutiny of crypto is getting stricter.
Boonen said the idea of having bonds on a blockchain like equity tokens came to him two years ago, after he realised it felt strange that private, bilateral deals drove lending at B2C2, the second-largest player in the market after Genesis. PV01’s cash management product aims to target crypto firms that find it difficult to move money back and forth between the crypto space and the conventional financial system, and people who have a lot of wealth in crypto who are simply unable or unwilling to bring it back into the fold of the traditional system. Boonen said PV01’s tokenized bills are “not our end game, but it’s in high demand”.
PV01 isn’t the first firm to attempt tokenized securities or to try bringing US government debt on-chain. Earlier this week, blockchain-based lending protocol Maple Finance announced a cash-management product that also provides access to one-month Treasurys. Also this month, Ondo Finance announced a stablecoin backed by money-market funds, exploring similar turf. Boonen said PV01’s tokenized bills remove a layer of trade, as customers can use stablecoins to buy them, rather than needing fiat dollars.
PV01’s broader ambition is to get corporations to issue bonds on a blockchain. Boonen believes that, like equity tokens, bonds should be on a blockchain. He said last year’s credit crunch was made more severe by the fact that no one knew who owned what debt and who owed what debt. On-chain bonds could solve that. Boonen said PV01’s target market is companies, rather than individuals.