S&P DJI, Kaiko Tokenise Treasuries Index for On-Chain Markets

US Treasuries are emerging as the collateral layer for blockchain-based financial systems and becoming an entry point for institutional capital moving on-chain. This has led to a growing need for benchmark-quality Treasury index data natively available on distributed ledgers.

Addressing the demand, S&P Dow Jones Indices (DJI) has partnered with digital asset market data company Kaiko to tokenise its iBoxx US Treasuries Index. It is the first major benchmark tokenised as a programmable, permissioned data asset with embedded distribution, compliance and licensing.

For FX markets, this marks a development that’s worthy of attention, considering that the US dollar is currently the largest tokenised traditional asset. On top of that, FX benchmarks spent some time at the centre of controversy in the past, raising questions about whether there is a need to step away from some historical practices and conventions.

The tokenised index itself is not an investable asset. It resides on-chain as a non-fungible token, encapsulating licensing rights and index programmable data feeds, all intended for integration into digital native financial products. S&P DJI-licensed product issuers will be permissioned to receive a single token to instantaneously access end-of-day index levels, intraday prices and corporate actions.

According to Cameron Drinkwater, chief product and operations officer at S&P DJI, the Depository Trust and Clearing Corporation’s (DTCC) decision in December to bring US Treasuries natively onto the Canton Network, a privacy-preserving blockchain designed for institutional finance, created a “natural opportunity” to put the iBoxx US Treasuries Index on Canton. Developers can use this tool to build new index-based products with the physical underlying securities also on-chain.

“S&P DJI focuses on the use of benchmarks in investable products and the ability to create liquid ecosystems around them. For that to work, you need the underlying [asset], index-based products built on top, and institutional players who want to provide liquidity and actively trade,” says Drinkwater, speaking at Kaiko’s Agora event in Cannes. “With the DTCC putting US Treasuries on-chain, all the ingredients were in place for real use cases that drive a utility and embed our intellectual property (IP) in these products.”

She believes that being on-chain provides better auditability and visibility into how IP is being used, with instantaneous reporting and potentially commercial exchange based on a smart contract.

“The more we bring data on-chain, especially private and IP-protected data, the more we need to treat data like a financial asset,” says Ambre Soubiran, CEO at Kaiko. “Through blockchain technology, we enable the traceability of data. This is important from an IP protection standpoint, but it also helps us to think programmatically about the monetisation related to the use of IP in a financial product.”

S&P DJI retains full control over index distribution and use, supported by IP protections relied upon in traditional markets, while exclusive minting authority over iBoxx tokens will ensure that only authorised tokens are created and distributed.

The index provider has announced several initiatives in the digital assets space in the past year. Most recently, S&P DJI licenced the S&P 500 Index to Trade[XYZ] for perpetual contracts on Hyperliquid. In July, the index provider collaborated with Centrifuge to bring the S&P 500 on-chain, while in October it worked with tokenisation platform Dinari to build the S&P Digital Markets 50 Index, combining cryptocurrencies and crypto-linked equities.