M^0

Proposal

With the recent introduction of the GENIUS act in the United States, and with the increased interest from US based entities in utilizing the M0 tech platform for the issuance of stablecoins, it makes sense to evolve the definition of Eligible Collateral for the network in a way that aligns more closely with GENIUS language.

With that goal, the present proposal recommends a revamped language for Eligible Collateral composition, in a way that maintains robustness and safety of collateral, while allowing issuers to utilize reserve components that are deemed permissible under GENIUS guidance. The new language proposed for such section of the Adopted Guidance was very much inspired in the GENIUS language, and it was reviewed with existing and prospecting issuers on the M0 network.

Change #1

Section: 3.1. Criteria for Eligible Collateral

Old

We expect Validators to solely and exclusively recognize assets as Eligible Collateral when such assets conform to the criteria below.

i. Criteria for the Eligibility of Assets:

• United States Treasury Bills with a remaining time to maturity of 180 days or less.
• Wrappers of United States Treasury Bills such as money market fund units (in so-called tokenized form over appropriate distributed ledgers—such as Ethereum Mainnet—or traditional book entry form) or any other comparable wrapper, that comply with the above mentioned remaining time to maturity criteria - subject to specific definition of the financial product in scope. List of approved wrappers: (1) Superstate Short Duration US Government Securities Fund (commonly referred to as USTB), (2) BlackRock USD Institutional Digital Liquidity Fund (commonly referred to as BUIDL).

ii. Ancillary Criteria for the Eligibility of Assets:

• So-called In-Transit Cash, defined as Deposit Equivalents in an amount equal to placed-and-executed-but-not-yet-settled buy orders for assets defined in (i). In case such orders are ultimately canceled, settled, or never settled, such balances shall no longer be recognized.
• So-called In-Transit Securities, defined as executed-but-not-yet-settled sell orders for assets defined in (i) (at the time of purchase) in case, for the avoidance of doubt, neither the securities nor balances in Deposit Equivalents are listed in the Collateral Storage (and more specifically Custody Account and Deposit Account of the SPV).

New

We expect Validators to solely and exclusively recognize assets as Eligible Collateral when such assets conform to the criteria below.

3.1.1. Criteria for the Eligibility of Assets i. Funds (denominated in the Reference Currency) credited to an account at a United States Federal Reserve Bank.

ii. Funds (denominated in the Reference Currency) held as demand deposits or insured shares at an insured depository institution - subject to specific institution in scope.

a. Such financial institutions shall be deemed to be automatically in scope if the totality of deposits are held in deposit placement networks. (Note: Minter must perform a credit suitability assessment prior to placing funds at such an institution.)

b. List of institutions additionally deemed in scope: (1) The Bank of New York Mellon Corporation; (2) DekaBank Deutsche Girozentrale; (3) Lead Bank.

iii. United States Treasury securities with a remaining time to maturity of 180 days or less.

iv. Funds (denominated in the Reference Currency) received under repurchase agreements where the Minter is the seller and with an overnight maturity.

v. Reverse repurchase agreements where the Minter is the cash lender and with an overnight maturity, that are backed by United States Treasury securities and other government securities such as securities issued or guaranteed by government agencies, including, among others, Fannie Mae, Freddie Mac, and the Federal Home Loan Bank. In the event that collateral is not in the form of United States Treasury securities, such reverse repurchase agreement must be overcollateralized at a rate deemed to be appropriate by the Minter.

vi. Securities issued by a regulated investment company, regulated fund or supervised entity, that is subject to prudential supervision in its home jurisdiction, provided that such vehicle invests exclusively in assets described in items (i), (ii), (iv) and (v). Specific to the requirements in (iii), securities shall be permitted to have a remaining maturity of 397 days or less so long as the weighted average portfolio maturity is 60 days or less and the weighted average portfolio life to maturity is 120 days or less.

vii. Any version of items (i), (ii), (iii), (vi) in tokenized form, provided that such versions comply with all applicable laws and regulations - subject to specific definition of the financial product in scope.

a. List of approved products: (1) Superstate Short Duration US Government Securities Fund (commonly referred to as USTB); (2) BlackRock USD Institutional Digital Liquidity Fund (commonly referred to as BUIDL).

3.1.2. Ancillary Criteria for the Eligibility of Assets

• So-called In-Transit Cash, defined as Deposit Equivalents in an amount equal to placed-and-executed-but-not-yet-settled buy orders for assets defined in 3.1.1. In case such orders are ultimately canceled, settled, or never settled, such balances shall no longer be recognized.
• So-called In-Transit Securities, defined as executed-but-not-yet-settled sell orders for assets defined in 3.1.1 (at the time of purchase) in case, for the avoidance of doubt, neither the securities nor balances in Deposit Equivalents are listed in the Collateral Storage (and more specifically Custody Account and Deposit Account of the SPV).

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