Superstate files plan to launch a tokenized government bond fund

Investment adviser Superstate Inc. filed a prospectus this week with the U.S. Securities and Exchange Commission to launch a tokenized government bond fund they say could eventually compete with stablecoins. 

The fund, called the Superstate Short-Term Government Bond Fund, will allow shareholders to hold a record of their ownership on the Ethereum blockchain, which they can then either custody on their own or hold with with digital asset custodians, the firm said. 

“Our vision is to create an SEC registered investment product that over time, competes with stablecoins to become the reserve asset & settlement choice of crypto,” the investment adviser said in a statement to The Block. 

The fund is “an ultra-short duration government securities fund,” according to the prospectus, which includes U.S. Treasury securities, U.S. government agency securities, repurchase agreements collateralized by securities issued by the U.S. government or U.S. government agencies, and other U.S. government securities.

Superstate just completed a $4m equity funding round from ParaFi Capital, 1kx, Cumberland Ventures, Coinfund and Distributed Global.

Blockchain technology

“The Fund will not directly or indirectly invest in any assets that rely on blockchain technology, such as cryptocurrencies,” Superstate said. 

Superstate Inc. CEO Robert Leshner founded Compound Labs' major lending protocol and was the CEO of Compound Labs, an open source software development company building products for DeFi. Compound Treasury, part of Compound Labs, used to allow institutional clients access to high yield fixed interest, but was closed earlier this year. 

The fund is similar to Franklin Templeton’s OnChain U.S. Government Money Fund, which was first launched in 2021 to become the first U.S.-registered mutual fund that uses a public blockchain to process transactions and record share ownership.

WisdomTree has also gotten in on tying municipal governments to crypto. The asset manager launched its WisdomTree Short-Term Treasury Digital Fund in 2022, which invests in short-term US treasury obligations.