Superstate Industry Council: a new alliance to promote Real World Assets

If you’ve hung around the crypto industry for a while, you’re familiar with some supposedly killer applications for blockchain that are just over the horizon—but that never really arrive. One of these is putting “real-world assets” (RWAs in crypto speak) on a blockchain, which is supposed to deliver a new era of cheaper and more convenient asset management. The idea, which has been pitched in one form or another for a decade—such as “real estate on the blockchain” or “shares of Apple on the blockchain”—is a good one, but no one can figure out how to make it catch on. Now, a new outfit called the Superstate Industry Council is pledging to make it work at last, beginning with blockchain-based trading of U.S. Treasuries.

The council is anchored by Superstate, a startup founded by Robert Leshner, a onetime bond guy who launched the successful DeFi platform known as Compound. Other members include around 20 established names in crypto, including Uniswap and CoinFund, and a handful of yet-to-be-named firms from the traditional banking sector. The idea is to have the council members act as ambassadors to Wall Street, making the case for trading Treasuries and other financial instruments in the form of tokenized assets.

Once again, this is not a new idea. Every month or so, I receive a press release that some big bank or other has just carried out a transaction involving tokenized versions of a commodity or a popular stock or whatever. But that’s about as far as it goes since not everyone is using the same blockchain plumbing to carry out these trades and, in any case, there isn’t enough liquidity to make it worthwhile—especially as the legacy system seems to handle slinging trillions of dollars of assets just fine.

I put all this to Leshner, whose Superstate now has nearly $40 million of U.S. Treasuries being traded as blockchain assets on its platform. Leshner was quick to concede that, for now at least, there is little interest among mainstream investors to trade tokenized assets. But he made the case that it will catch on for the simple reason that blockchain is simply a superior technology for moving assets around—not only is it cheap and secure, but it’s programmable. This means that, beyond buying or selling a Treasury bill, it’s possible to provide a complex series of instructions on how to manage the Treasury in the future, including in the case of contingencies—all on the blockchain.

Leshner is realistic about what it will take to pull more traditional firms toward trading Treasuries and other assets on the blockchain. He says that rather than trying to leapfrog the existing financial stack, Superstate and some traditional firms like Franklin Templeton are framing their service as a “bridge” between existing Wall Street tech and the blockchain future. On this front, the new industry council is likely to prove helpful by persuading the old guard to give the new thing a try. Also, Leshner should not be underestimated since he is one of a handful of executives who have serious cred in both crypto and TradFi circles, and since his first startup, Compound, is viewed as a blue-chip brand.

Still, Leshner and his new council will need both patience and luck if they are to turn one of crypto’s favorite pie-in-the-sky use cases into an everyday reality. Let’s check back in a year and see if that long-awaited breakthrough actually arrives this time.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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