Key Highlights
- Ondo Finance completes first cross-border redemption of tokenized U.S. Treasuries.
- Redemption executed on XRPL with fiat settlement via banking rails.
- The process enables near real-time settlement outside traditional banking hours.
Ondo Finance has completed what it describes as the first near real-time, cross-border redemption of tokenized US treasuries, working with J.P. Morgan’s Kinexys, Mastercard, and Ripple. The development shows how tokenized assets can be settled across the public blockchain and the global banking system.
According to the official release, Ripple redeemed part of its holdings of Ondo Short-Term US Government Treasuries (OUSG), which had been issued on the XRPL platform.
The redemption process set off an automatic process of fiat settlement using the MTN of Mastercard, which in turn sent the instruction to Kinexys from J.P. Morgan. Kinexys deducted Ondo’s blockchain deposit account and facilitated a cross-border payment of USDs to Ripple’s Singaporean bank account using J.P. Morgan’s correspondent banking network.
Redemption details
In the development, one part of the process took place on a public blockchain, XRPL, and the fiat payment side happened in the institutional banking rails, all within the same minute, outside of traditional banking cutoff windows. This is also the first instance of redemptions of US Treasuries, tokenized and cross-border.
Traditionally, the redemption process of tokenized RWAs has been subject to wire transfers that have been manual and time-consuming, being limited by banking hours and procedures.
The pilot introduces a consolidated model, whereby token redemption automatically initiates the immediate fiat settlement process, without any additional instructions that are not part of the same process. The approach combines blockchain transaction execution with interbank settlement mechanisms, allowing for the faster transfer of capital.
Ian De Bode, President of Ondo Finance, commented on the development, stating, “This milestone represents the first time tokenized U.S. Treasuries have settled across borders and banks in near real time and outside traditional banking windows. By connecting public blockchain infrastructure with interbank settlement rails, we are laying the groundwork for 24/7 global markets that never close.”
Another development
In a separate update, Ondo Finance, along with Broadridge Financial Solutions, recently launched a new on-chain voting mechanism that will enable holders of over 250 tokenized stocks and exchange-traded funds to take part in shareholder votes using their blockchain wallets.
The mechanism combines Ondo’s tokenized securities with Broadridge’s ProxyVote technology. Investors can view company documentation, cast votes, and confirm their transactions with their cryptocurrency wallets. The votes are then processed by Broadridge and directed into conventional corporate governance and proxy voting systems.
The platform retains all existing custody processes and compliance while incorporating on-chain shareholder involvement. It allows tokenization on various blockchains like Ethereum, Solana, and BNB Chain, where one can trade anytime with voting rights attached.
Adoption of tokenized financial instruments
With the continued development of tokenized assets, it will become increasingly important to develop solutions that combine the efficiency of blockchain with the trust and liquidity provided by traditional systems.
The collaboration between Ondo, J.P. Morgan, Mastercard, and Ripple is an indication of strong progress toward the adoption of tokenized financial instruments that facilitate efficient global settlements.
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