BitGo provides a secure tri-party collateral management solution to leading institutions using Superstate’s tokenized Treasury Bill fund as collateral, highlighting the utility of these modernized financial assets 

• BitGo’s industry-leading collateral management solution supports a first-of-its-kind tri-party transaction between Arbelos Markets and Nonco, allowing them to execute their trading strategies securely and efficiently 
• Superstate’s Short Duration U.S. Government Securities Fund, a tokenized fund where shares are issued as ERC-20 tokens, was employed as collateral, successfully highlighting the real-world application and value of tokenized assets 
• This tri-party transaction underscores the importance of secure market structure to continue to take advantage of opportunities within the digital asset space while ensuring proper protections are in place

BitGo, the leading digital asset custodian, successfully supported a pioneering tri-party transaction between a trusted principal liquidity provider in the derivatives market Arbelos Markets, and forward-thinking institutional trading firm Nonco. This bilateral option trade on BTC/USD used Superstate’s USTB, a tokenized fund token, as collateral. BitGo Trust Company, Inc. (BitGo Trust) secured the assets using its custodial segregated collateral account.

“This transaction exemplifies the innovative market structure BitGo has been championing alongside our partners for a very long time,” said Adam Sporn, Managing Director of Institutional Sales and Global Head of Prime Sales. “We’ve seen an increased demand to utilize tokenized funds within our Tri-Party Collateral Management business and offering our clients optionality to post them with assets including USTB has been valuable as we support their trading needs.” 

Using USTB as collateral represents a significant advancement for institutional trading, as unlike posting USDC or fiat, it earns interest. This transaction demonstrates how tokenized assets like USTB, which provide exposure to T-Bill yields, can be used as collateral to enhance capital efficiency. By leveraging USTB to support these trades, investors can simultaneously earn interest on their collateral and maximize potential returns with more efficient collateral, showcasing a tangible use case of tokenization.

“Our vision at Superstate is for tokenized assets to be portable, programmable collateral with more use cases beyond the investment characteristics of the asset,” said Superstate CEO & Co-founder Robert Leshner. “This trade showcases the utility of tokenized assets, like USTB, and is one of the first tangible examples of innovative, real-world applications. We’re excited to see BitGo bring it to life!”

“We are thrilled to have collaborated with BitGo and Arbelos Markets on this groundbreaking tri-party transaction. Utilizing Superstate’s USTB as collateral not only enhances our trading efficiency but also showcases the transformative potential of tokenized assets. This milestone aligns with our approach to mitigating counterparty risk while contributing to the growth of the digital asset space.” Fernando Martinez, Nonco CEO.

BitGo’s collateral management solution is built off of the strength of BitGo Trust’s bankruptcy remote, qualified custody with $250M in insurance. Collaboration between various BitGo entities delivered monitoring for collateral sufficiency, daily mark-to-market reporting of collateral value to both parties in addition to a designated approval process for either party to withdraw margin or collateral from the collateral account. All of this helps address a key concern that has plagued digital asset investors in today’s markets – counterparty risk. 

“This derivative transaction is proof positive that capital efficiency in crypto can be achieved without increasing counterparty risk. Tri-party collateral management solutions like BitGo’s and yield-bearing collateral assets like Superstate’s are the next steps in the institutional adoption of crypto,” said Joshua Lim, co-founder of Arbelos Markets

This collaboration between these major digital asset institutions establishes a new benchmark for secure and efficient transactions in the digital asset space. By leveraging innovative technology and maintaining a commitment to excellence, this tri-party transaction paves the way for broader adoption of digital assets, including tokenized assets, and unlocks exciting possibilities for the market.