0xd0fe2019…4331sent to0xb024ac5a…a016·#21,155,226·view on Etherscan
# Update eligible collateral criteria to prepare for future onboarding of US treasuries investment or holding structures
### Background
So-called tokenized US treasuries products have grown significantly in 2024 (see [https://app.rwa.xyz/treasuries](https://app.rwa.xyz/treasuries)), and in some early circumstances have been utilized as collateral for dollar-referencing stablecoins. As a flexible infrastructure layer for money issuance, M^0 is uniquely able to connect the upstream supply of high-quality eligible collateral to downstream demand for stablecoins, and their integration across decentralized finance.
### Proposal
With the intention of accommodating certain tokenized US treasuries products (understanding that those vary significantly within the category) as well as US treasuries investment or holding structures as eligible collateral form-factor, thus offering M^0 minters a broader variety of service providers for the asset management and custody of collateral that is in tune with market trends, while remaining uncompromising on credit quality and custody, it is proposed that the Adopted Guidance be updated in the following way. Note that this update does not speak to the specific quality of any one structure or service provider, and it is recommended that those be specifically voted on via a “Collateral guidance” type of proposal.
### Change #1
**Section: 3.1. Criteria for Eligible Collateral**
Old:
> i. Criteria for the Eligibility of Assets:
> * United States Treasury Bills with a remaining time to maturity of 90 days or less.
New:
> i. Criteria for the Eligibility of Assets:
> * United States Treasury Bills with a remaining time to maturity of *~~90~~180* days or less.
> * *Wrappers of United States Treasury Bills such as money market fund units that comply with the above mentioned remaining time to maturity criteria - subject to specific definition of the financial product in scope.*
### Change #2
**Section: 3.2. Valuation Policy for Eligible Collateral**
Old:
> In proposing valuation options for Eligible Collateral, the Adopted Guidance document has considered two alternative options: mark-to-market, and at-cost, opting ultimately for a mark-to-market approach. The two options somehow reflect similar accounting methodology for so-called held for trading or available for sale assets, and have a set of pros and cons that have been analyzed when proposing one over another:
> * …
> * Capital efficiency: the continuous increases in Minters' Owed M due to the accrual of Minter Rate introduces natural pressure on the Collateralization Ratio. Valuing collateral at market price can alleviate this pressure, due to the time value of the instruments currently considered eligible.
New:
> In proposing valuation options for Eligible Collateral, the Adopted Guidance document has considered two alternative options: mark-to-market, and at-cost, opting ultimately for a mark-to-market approach. The two options somehow reflect similar accounting methodology for so-called held for trading or available for sale assets, and have a set of pros and cons that have been analyzed when proposing one over another:
> * …
> * Capital efficiency: the continuous increases in Minters' Owed M due to the accrual of Minter Rate introduces natural pressure on the Collateralization Ratio. Valuing collateral at market price can alleviate this pressure, due to the time value of the instruments currently considered eligible.
> * *Technology agnostic: the valuation of Eligible Collateral is independent from the technological wrapper it is stored in, assuming this wrapper does not insert additional risk layers for the holder. This means that, for instance, in case of an explicitly approved investment in fund units, the NAV calculation of the fund is ignored and a look-through approach is applied to evaluate the value of the underlying assets. In case additional risk layers are instead added by the wrapping technology, appropriate haircuts should be defined as part of this document.*
---