Today, MasterCard announced a strategic plan to bring its RWAs to its MTN (MasterCard Multi-Token Network) through a partnership with RWA tokenization firm Ondo Finance.
The MTN is a digital network that connects financial institutions with businesses to enhance cross-border payment experiences.
Tokenized US Treasury bonds
As part of this collaboration, Ondo brings OUSG (Ondo Short-Term US Government Treasuries) to the MTN. This offering is set to allow institutional investors and businesses on MTN to access the tokenized version of US Treasury bonds for daily yields without the need for stablecoin access points.
MasterCard’s MTN brings together a variety of API-activated, blockchain resources and standards designed to streamline high-speed digital transactions and support various institutional finance applications. This paves the way for a wide application of OUSG on the network.
Businesses on the MTN now have around-the-clock access to OUSG on a public blockchain, before settlement payment settlements on traditional digital payment systems without the need for crypto infrastructure/wallets. This allows investors to access tokenized treasury bonds through traditional bank accounts instantly and in a simplified manner, with 24/7 money access.
Through its robust blockchain infrastructure, Ondo provides innovative tokenized treasuries. It, simply, transforms US treasury bonds into digital tokens (OUSG), allowing investors to invest in this historically stable investment option.
Several dominant financial institutions oversee the management of holdings backing the OUSG. Most of the OUSG portfolio is invested in the BlackRock USD BUIDL. Other portions are invested in GSE funds and short-term US Treasuries from Fundbridge Capital, Wellington Management, WisdomTree, and Franklin Templeton.
With this diversified approach, Ondo provides a stable way to engage in the US Treasury market through the benefits of tokenization.
The Rise of RWAs
The tokenization of RWAs has attracted interest from various players across finance, payments, and business sectors due to its ability to make assets more accessible, cost-effective, and efficient.
In the past years, digital asset management firms could only provide crypto assets and NFTs. However such assets were not attractive to traditional investors who prefer long-term financial security.
The emergence of RWAs created an opportunity for traditional investors to interact with modern Fintech solutions to execute digital transactions. This trend is creating an intersection between digital assets and traditional finance.
Through blockchain technology, RWAs like real estate, art and collectibles, treasury bonds, intellectual properties, traditional financial assets, and others can be tokenized into digital assets. This process entails developing digital assets as a representation of stake or ownership in an underlying RWA.
This enables investors to purchase small stakes in an RWA, which is much more affordable, accessible, and efficient. For instance, instead of an individual purchasing real estate worth $1 million, multiple people can buy tokenized shares of the building worth $100 each.
