Tokenization company PV01, helmed by founders of crypto market maker B2C2, has completed its first tokenized bond sale under English law, the team said Tuesday, marking a crucial step towards a goal of creating a bond market on blockchain rails – including corporate debt.

The asset was a tokenized version on the Ethereum blockchain of a single U.S. Treasury bill worth $5 million issued on April 8 and redeemed a week later, with market makers B2C2, BlockTower Capital and Keyrock investing in PV01's "proof-of-concept" issuance.

Bermuda-based PV01 emerged from stealth a year ago under the leadership of Max Boonen and Flavio Molendini, founders of B2C2, joining the race to bring real-world assets (RWA) such as Treasuries and bonds to blockchain to make transactions cheaper, faster and more transparent. Tokenized RWAs could swell to $10 trillion as more traditional finance players adopt blockchain technology, digital asset manager 21.co forecasted last year.

Bringing debt markets on-chain could also have helped prevent the credit meltdown of the crypto industry in 2022 with the implosion of hedge fund Three Arrows Capital (3AC) and lender Celsius Network, with public ledgers revealing the amount of debt accrued in the system and showing who owed debt to whom, Max Boonen, co-founder and CEO of PV01, said in an interview with CoinDesk.

The market for tokenized Treasuries boomed over the past year, surpassing $1 billion, with asset management giant BlackRock recently joining the competition with Securitize.

What distinguishes PV01's approach from rivals is that its token represents the bond itself with the entire lifecycle of the asset taking place on-chain, while most competitors create tokens as a wrapper of a money market fund. This eliminates an intermediary layer in the tokenization process, a necessary design choice for PV01's future plans to expand to corporate bond tokens issued fully on-chain, Boonen explained.

The tokens are transferable between buyers and sellers, allowing the trade and set prices on secondary markets without the need for redemptions.

"The market makers are very keen to provide over-the-counter liquidity for the Treasury bond tokens, because one of their big objectives is to be able to use the tokens as collateral to support their trading activity," Boonen added.

After completing the first issuance, Boonen said that PV01 plans to scale its tokenized Treasury offering in the short-term and expand to corporate bond issuances in the medium term.

"In the next few months, we hope to do [an issuance] with a well-known crypto player where they issue a bona fide corporate bond" on-chain, Boonen said.