I
On 21 September the European Central Bank did two things it had never done before. It switched on Pontes, a service that lets tokenised securities settle in central bank money, with a first group of banks and ledger operators already connected. It also announced that a portion of its own funds will be invested in tokenised bonds issued by euro-area governments, agencies and supranationals, settled through the new rails. Piero Cipollone of the ECB's executive board described it as bringing the stability and trust of central bank money to tokenised finance. That is a central bank saying, in its own name and with its own balance sheet, that government debt on a distributed ledger is an asset class it intends to hold.
The rest of the world got there earlier and by different routes. Hong Kong has sold three digital green bonds worth a combined HK$16.8 billion, the latest settled in tokenised central bank money. The Marshall Islands issued a Treasury-backed sovereign bond onchain to fund a basic-income programme delivered to citizens' phones. Slovenia became the first euro-area sovereign with a digital bond in 2024. The UK's DIGIT pilot is booked for early 2027. Against a $102 trillion global public debt stock, the onchain slice is still tiny. The question worth asking is not how big it is but what, precisely, the ledger changes about how a government borrows. This piece works through five answers and then looks at the network that has quietly become the largest home for non-US sovereign paper: Stellar.
A sovereign bond is a promise to pay, recorded in a register, held through a chain of intermediaries and settled on a schedule. When a fund in Singapore buys a German Bund, the trade is agreed in an instant and then spends a day, sometimes two, moving through a custodian, a sub-custodian, a central securities depository and a payment system before the bond and the cash actually change hands.
That gap is called settlement risk. The entire architecture of modern bond markets, from margin to netting to the $45 billion that changes hands in gilts on an average day, exists to manage it. The US moved Treasuries to T+1 in 2024 and treated it as a milestone. Markets close on Friday evening and reopen on Monday. A coupon payment is a batch file sent to a paying agent. None of this is broken, exactly. It is just built for a world in which the register and the payment lived in different buildings, whereas a blockchain is a register and a payment system in the same place.
On a public ledger like Stellar, a transaction reaches finality in about five seconds and costs fractions of a cent. The bond and the cash move in the same atomic step, so there is no window in which one side has delivered and the other has not. There is no weekend. That sounds like a convenience until you count what it removes. Settlement risk, together with the capital held against it, largely disappears when delivery and payment are the same transaction. The GFMA and BCG estimated that ledger-based settlement at scale would free about $100 billion of collateral a year globally and save $15 to $20 billion in operational cost.
A treasury that can settle at 3am on a Sunday can also manage its cash on a Sunday, which matters more to an emerging-market finance ministry rolling short paper than to a G7 debt office. Hong Kong's digital green bonds recorded a 10.8 percent liquidity gain and halved issuance time against the conventional process. That is with much of the surrounding plumbing still analogue.
A tokenised bond is not a PDF with a hash. It is an asset whose issuer can define, at the protocol level, who may hold it, where it may move and what happens on a coupon date. Stellar was designed with this in mind and it is the least discussed reason institutions choose it. Asset-level controls let an issuer require that every wallet holding a token has been authorised, freeze or claw back a position if a court orders it and restrict transfers to approved counterparties, all without a smart contract that has to be audited from scratch.
The Stellar Development Foundation's own framing is that compliance is native: the KYC and control primitives sit in the ledger rather than in an application layer bolted on top. For a sovereign issuer that means a bond can be sold to a permitted investor base, pay its coupon automatically in a stablecoin on the due date and be pledged as collateral in a lending protocol such as Templar or Blend on the same network, with every step visible to the regulator in real time. Programmability is the difference between a digital record of a bond and a bond that does things.
Everything above depends on a detail that most tokenisation coverage skips: the money has to be onchain too. A bond that settles in five seconds against cash that settles tomorrow has not solved anything. This is the missing piece the UK's digital gilt is waiting for. Sterling stablecoins barely exist, the largest has a market cap of $34 million and the UK's crypto regime does not take effect until October 2027, so the pilot has to solve for a risk-free settlement asset before it can settle anything.
The ECB's answer is Pontes: tokenised assets settle against central bank money held at the Eurosystem. Hong Kong's answer for its third issue was tokenised central bank money for the HKD and RMB tranches. Stellar's answer is that the cash was there first. Circle's USDC is native on the ledger with a $256 million market cap on Stellar as of Q1 2026, up 15 percent in a quarter; euro stablecoins from Société Générale-FORGE (EURCV) and AllUnity (EURAU) are live; euro stablecoin volume on the network grew twelvefold year on year; and stablecoin payment volume ran to $5.5 billion in the first quarter, up 72 percent.
A sovereign bond issued on Stellar can pay its coupon in a regulated dollar or euro token to a wallet anywhere in the world; the holder can redeem that token into bank money through Circle. That is the cash leg solved by the private sector rather than the central bank. It is why the non-US sovereign products chose the network before the central banks caught up.
The GFMA number is the headline, but the granular version is more persuasive. A conventional bond issue pays a syndicate, a paying agent, a registrar, a listing venue and a chain of custodians, each of which reconciles its own records against everyone else's. On a ledger the register is shared, so reconciliation is not a job. Coupon payments are a scheduled transfer rather than a batch process. Corporate actions are a state change.
The World Economic Forum piece by the IMF's Mohamed Maait and Egypt's Seham Farouk makes the point that matters for the countries that most need it: developing nations borrow at two to four times the rates of advanced economies, nearly half of IMF-eligible low-income countries are in or near debt distress and Egypt expects to spend almost 47 percent of government expenditure on interest in 2026-27. For those issuers, shaving underwriting fees and shortening issuance time is not efficiency; it is fiscal space. A ledger that charges fractions of a cent per transaction and settles in seconds is a cheaper way to run a national debt office. The cheapest version of that ledger is the one that already has the cash on it.
The minimum ticket on a conventional sovereign bond is typically $100,000, which is why individual citizens own their own government's debt through funds rather than directly. Thailand's DLT scripless savings bond in 2020 set the minimum at 1,000 baht, about $30. Its 2025 G-Token pilot went to 100 baht. The Philippines sells tokenised treasury bonds from $8.50. On Stellar, Etherfuse's Stablebonds wrap Mexican CETES and Brazilian Tesouro bonds so that a worker in Monterrey or São Paulo can hold a slice of their own government's short-term paper in a wallet, earn the local risk-free rate and move it in seconds.
The Marshall Islands turned the idea around: USDM1 is a dollar sovereign bond backed by US Treasury bills held by an independent trustee; the proceeds fund a basic-income programme paid into a Stellar wallet app called Lomalo, replacing quarterly cash deliveries across an archipelago where physical distribution was the hardest part of the policy. Denelle Dixon, chief executive of the Stellar Development Foundation, called it what adoption looks like for the technology. It is hard to argue. The same rail that lets a sovereign issue debt lets it deliver the spending that debt pays for.
Tokenised US Treasuries are a $14.8 billion market dominated by Circle's USYC, BlackRock's BUIDL and Ondo's USDY, most of it on Ethereum. Tokenised non-US government debt is a $1.06 billion market across 25 products and about 10,000 holders. The largest single home for it is Stellar, with roughly $490 million as of 20 August per rwa.xyz. The network overtook Ethereum in this category in early February 2026 and has held the lead daily since. The biggest contributor is Spiko, whose euro-denominated T-bill money-market fund grew from about $520 million to $970 million in a year with most of that growth landing on Stellar; Spiko is now the largest issuer on the network at $1.55 billion across its euro and US products. Behind it sit Etherfuse's CETES and Tesouro Stablebonds, South Korean Treasury Bonds, the Marshall Islands' USDM1, NRW1 from Cashlink and a roster the foundation describes as spanning five continents.
The network's total tokenised real-world assets, excluding fiat stablecoins, went from about $500 million in early 2025 to $868.8 million at the end of the year, crossed $1 billion in January, $2 billion in April, $3 billion in June and reached $3.996 billion on 29 August, about 9 percent of all distributed RWA value across public blockchains.
Why this network rather than the larger ones? The foundation gives four reasons. Each maps onto one of the changes above. Stellar was built for cross-border, multi-currency settlement, so a euro fund, a peso bond and a won bond sit on the same ledger and can be exchanged against each other through its built-in order book without a bridge. Fees are fractions of a cent and finality arrives in about five seconds, so a debt office is not paying Ethereum gas to move a coupon. Compliance is native, so an issuer's authorisation, freeze and clawback controls are ledger features rather than bespoke code. Dollar liquidity is frictionless because USDC is native and Circle's Cross-Chain Transfer Protocol moves it in and out.
The institutions that have chosen it are the kind that read those four lines carefully: Franklin Templeton, WisdomTree, Ondo, Société Générale, Amundi, AllUnity, U.S. Bank, Kenanga in Malaysia and Marketnode in Singapore, the last backed by SGX and Temasek. The pattern in the issuer table is the tell. The largest asset on Stellar is a regulated European money-market fund, not a crypto-native product; four of the top five issuers are asset managers or regulated financial firms.
Three things, none of them fatal. The first is central bank money for the largest markets. Stellar solved the cash leg with regulated stablecoins, which works for a Mexican CETES wrapper or a euro money-market fund and is exactly what a G7 debt office cannot yet accept for a benchmark issue; that is why the ECB built Pontes and why the UK is waiting. The two approaches will coexist, with stablecoins carrying the retail, cross-border and emerging-market flows and tokenised central bank money carrying the wholesale sovereign flows.
The interesting engineering is where they meet. The second is fragmentation. Twenty-five non-US sovereign products across half a dozen chains is a market where liquidity pools do not talk to each other. Part of the reason Spiko's fund concentrated on Stellar is that a single venue with native multi-currency exchange is more useful than a token stranded on a chain with no euro liquidity. The third is secondary trading. Most tokenised sovereign paper today is bought and held or redeemed with the issuer; the day a tokenised Bund trades on a ledger with the depth of the cash market is still ahead; the ECB's decision to become a buyer is the first step toward a two-sided market in central bank money.
The direction is not in doubt. A central bank has just put its own money into tokenised government bonds. Hong Kong has issued three times and each time larger. A Pacific microstate has run its social policy through a sovereign bond on a public ledger. The network that holds more of the world's non-US government debt than any other is one whose fees round to zero, whose settlement rounds to instant and whose compliance controls were designed for exactly this before the issuers arrived. Governments are putting their debt onchain because the ledger settles in seconds, carries the rules with the asset, holds the cash next to the bond, costs less to run and lets a citizen buy a slice of their own country for the price of lunch. Stellar is where a great deal of that is already happening. The $490 million is less a headline than a floor.
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Vested Interest Disclosure: HackerNoon has reviewed the report for quality, but the claims herein belong to the author. #DYOR.
The rest of the world got there earlier and by different routes. Hong Kong has sold three digital green bonds worth a combined HK$16.8 billion, the latest settled in tokenised central bank money. The Marshall Islands issued a Treasury-backed sovereign bond onchain to fund a basic-income programme delivered to citizens' phones. Slovenia became the first euro-area sovereign with a digital bond in 2024. The UK's DIGIT pilot is booked for early 2027. Against a $102 trillion global public debt stock, the onchain slice is still tiny. The question worth asking is not how big it is but what, precisely, the ledger changes about how a government borrows. This piece works through five answers and then looks at the network that has quietly become the largest home for non-US sovereign paper: Stellar.
What a government bond does today and why it is slow
A sovereign bond is a promise to pay, recorded in a register, held through a chain of intermediaries and settled on a schedule. When a fund in Singapore buys a German Bund, the trade is agreed in an instant and then spends a day, sometimes two, moving through a custodian, a sub-custodian, a central securities depository and a payment system before the bond and the cash actually change hands.
That gap is called settlement risk. The entire architecture of modern bond markets, from margin to netting to the $45 billion that changes hands in gilts on an average day, exists to manage it. The US moved Treasuries to T+1 in 2024 and treated it as a milestone. Markets close on Friday evening and reopen on Monday. A coupon payment is a batch file sent to a paying agent. None of this is broken, exactly. It is just built for a world in which the register and the payment lived in different buildings, whereas a blockchain is a register and a payment system in the same place.
Change one: settlement that closes in seconds, every day
On a public ledger like Stellar, a transaction reaches finality in about five seconds and costs fractions of a cent. The bond and the cash move in the same atomic step, so there is no window in which one side has delivered and the other has not. There is no weekend. That sounds like a convenience until you count what it removes. Settlement risk, together with the capital held against it, largely disappears when delivery and payment are the same transaction. The GFMA and BCG estimated that ledger-based settlement at scale would free about $100 billion of collateral a year globally and save $15 to $20 billion in operational cost.
A treasury that can settle at 3am on a Sunday can also manage its cash on a Sunday, which matters more to an emerging-market finance ministry rolling short paper than to a G7 debt office. Hong Kong's digital green bonds recorded a 10.8 percent liquidity gain and halved issuance time against the conventional process. That is with much of the surrounding plumbing still analogue.
Change two: a bond that carries its own rules
A tokenised bond is not a PDF with a hash. It is an asset whose issuer can define, at the protocol level, who may hold it, where it may move and what happens on a coupon date. Stellar was designed with this in mind and it is the least discussed reason institutions choose it. Asset-level controls let an issuer require that every wallet holding a token has been authorised, freeze or claw back a position if a court orders it and restrict transfers to approved counterparties, all without a smart contract that has to be audited from scratch.
The Stellar Development Foundation's own framing is that compliance is native: the KYC and control primitives sit in the ledger rather than in an application layer bolted on top. For a sovereign issuer that means a bond can be sold to a permitted investor base, pay its coupon automatically in a stablecoin on the due date and be pledged as collateral in a lending protocol such as Templar or Blend on the same network, with every step visible to the regulator in real time. Programmability is the difference between a digital record of a bond and a bond that does things.
Change three: cash that lives where the bond lives
Everything above depends on a detail that most tokenisation coverage skips: the money has to be onchain too. A bond that settles in five seconds against cash that settles tomorrow has not solved anything. This is the missing piece the UK's digital gilt is waiting for. Sterling stablecoins barely exist, the largest has a market cap of $34 million and the UK's crypto regime does not take effect until October 2027, so the pilot has to solve for a risk-free settlement asset before it can settle anything.
The ECB's answer is Pontes: tokenised assets settle against central bank money held at the Eurosystem. Hong Kong's answer for its third issue was tokenised central bank money for the HKD and RMB tranches. Stellar's answer is that the cash was there first. Circle's USDC is native on the ledger with a $256 million market cap on Stellar as of Q1 2026, up 15 percent in a quarter; euro stablecoins from Société Générale-FORGE (EURCV) and AllUnity (EURAU) are live; euro stablecoin volume on the network grew twelvefold year on year; and stablecoin payment volume ran to $5.5 billion in the first quarter, up 72 percent.
A sovereign bond issued on Stellar can pay its coupon in a regulated dollar or euro token to a wallet anywhere in the world; the holder can redeem that token into bank money through Circle. That is the cash leg solved by the private sector rather than the central bank. It is why the non-US sovereign products chose the network before the central banks caught up.
Change four: what it costs to issue and service
The GFMA number is the headline, but the granular version is more persuasive. A conventional bond issue pays a syndicate, a paying agent, a registrar, a listing venue and a chain of custodians, each of which reconciles its own records against everyone else's. On a ledger the register is shared, so reconciliation is not a job. Coupon payments are a scheduled transfer rather than a batch process. Corporate actions are a state change.
The World Economic Forum piece by the IMF's Mohamed Maait and Egypt's Seham Farouk makes the point that matters for the countries that most need it: developing nations borrow at two to four times the rates of advanced economies, nearly half of IMF-eligible low-income countries are in or near debt distress and Egypt expects to spend almost 47 percent of government expenditure on interest in 2026-27. For those issuers, shaving underwriting fees and shortening issuance time is not efficiency; it is fiscal space. A ledger that charges fractions of a cent per transaction and settles in seconds is a cheaper way to run a national debt office. The cheapest version of that ledger is the one that already has the cash on it.
Change five: who gets to buy
The minimum ticket on a conventional sovereign bond is typically $100,000, which is why individual citizens own their own government's debt through funds rather than directly. Thailand's DLT scripless savings bond in 2020 set the minimum at 1,000 baht, about $30. Its 2025 G-Token pilot went to 100 baht. The Philippines sells tokenised treasury bonds from $8.50. On Stellar, Etherfuse's Stablebonds wrap Mexican CETES and Brazilian Tesouro bonds so that a worker in Monterrey or São Paulo can hold a slice of their own government's short-term paper in a wallet, earn the local risk-free rate and move it in seconds.
The Marshall Islands turned the idea around: USDM1 is a dollar sovereign bond backed by US Treasury bills held by an independent trustee; the proceeds fund a basic-income programme paid into a Stellar wallet app called Lomalo, replacing quarterly cash deliveries across an archipelago where physical distribution was the hardest part of the policy. Denelle Dixon, chief executive of the Stellar Development Foundation, called it what adoption looks like for the technology. It is hard to argue. The same rail that lets a sovereign issue debt lets it deliver the spending that debt pays for.
The case study: how Stellar became the home of non-US sovereign debt
Tokenised US Treasuries are a $14.8 billion market dominated by Circle's USYC, BlackRock's BUIDL and Ondo's USDY, most of it on Ethereum. Tokenised non-US government debt is a $1.06 billion market across 25 products and about 10,000 holders. The largest single home for it is Stellar, with roughly $490 million as of 20 August per rwa.xyz. The network overtook Ethereum in this category in early February 2026 and has held the lead daily since. The biggest contributor is Spiko, whose euro-denominated T-bill money-market fund grew from about $520 million to $970 million in a year with most of that growth landing on Stellar; Spiko is now the largest issuer on the network at $1.55 billion across its euro and US products. Behind it sit Etherfuse's CETES and Tesouro Stablebonds, South Korean Treasury Bonds, the Marshall Islands' USDM1, NRW1 from Cashlink and a roster the foundation describes as spanning five continents.
The network's total tokenised real-world assets, excluding fiat stablecoins, went from about $500 million in early 2025 to $868.8 million at the end of the year, crossed $1 billion in January, $2 billion in April, $3 billion in June and reached $3.996 billion on 29 August, about 9 percent of all distributed RWA value across public blockchains.
Why this network rather than the larger ones? The foundation gives four reasons. Each maps onto one of the changes above. Stellar was built for cross-border, multi-currency settlement, so a euro fund, a peso bond and a won bond sit on the same ledger and can be exchanged against each other through its built-in order book without a bridge. Fees are fractions of a cent and finality arrives in about five seconds, so a debt office is not paying Ethereum gas to move a coupon. Compliance is native, so an issuer's authorisation, freeze and clawback controls are ledger features rather than bespoke code. Dollar liquidity is frictionless because USDC is native and Circle's Cross-Chain Transfer Protocol moves it in and out.
The institutions that have chosen it are the kind that read those four lines carefully: Franklin Templeton, WisdomTree, Ondo, Société Générale, Amundi, AllUnity, U.S. Bank, Kenanga in Malaysia and Marketnode in Singapore, the last backed by SGX and Temasek. The pattern in the issuer table is the tell. The largest asset on Stellar is a regulated European money-market fund, not a crypto-native product; four of the top five issuers are asset managers or regulated financial firms.
What is still missing
Three things, none of them fatal. The first is central bank money for the largest markets. Stellar solved the cash leg with regulated stablecoins, which works for a Mexican CETES wrapper or a euro money-market fund and is exactly what a G7 debt office cannot yet accept for a benchmark issue; that is why the ECB built Pontes and why the UK is waiting. The two approaches will coexist, with stablecoins carrying the retail, cross-border and emerging-market flows and tokenised central bank money carrying the wholesale sovereign flows.
The interesting engineering is where they meet. The second is fragmentation. Twenty-five non-US sovereign products across half a dozen chains is a market where liquidity pools do not talk to each other. Part of the reason Spiko's fund concentrated on Stellar is that a single venue with native multi-currency exchange is more useful than a token stranded on a chain with no euro liquidity. The third is secondary trading. Most tokenised sovereign paper today is bought and held or redeemed with the issuer; the day a tokenised Bund trades on a ledger with the depth of the cash market is still ahead; the ECB's decision to become a buyer is the first step toward a two-sided market in central bank money.
The direction is not in doubt. A central bank has just put its own money into tokenised government bonds. Hong Kong has issued three times and each time larger. A Pacific microstate has run its social policy through a sovereign bond on a public ledger. The network that holds more of the world's non-US government debt than any other is one whose fees round to zero, whose settlement rounds to instant and whose compliance controls were designed for exactly this before the issuers arrived. Governments are putting their debt onchain because the ledger settles in seconds, carries the rules with the asset, holds the cash next to the bond, costs less to run and lets a citizen buy a slice of their own country for the price of lunch. Stellar is where a great deal of that is already happening. The $490 million is less a headline than a floor.
Don’t forget to like and share the story!
Vested Interest Disclosure: HackerNoon has reviewed the report for quality, but the claims herein belong to the author. #DYOR.