OpenEden $TBILL STEP Application

DAO Programs & Initiatives STEP Applications
1

Applicant information

Name: OpenEden Group
Address (Headquarters): 1 Kim Seng Promenade #11-01 Great World City
City, State, Postal Code: Singapore, 237994
Country: Singapore
Website: https://openeden.com/

Primary contact

Name: Jeremy Ng
Title: Founder
Country: Singapore
Email: jeremy.ng@openeden.com
Telegram: @ly3333
Forum: OpenEdenLabs

Executive Summary

The First Native On-chain TBILL Vault with Arbitrum as a Core Focus
The OpenEden Tokenised U.S. Treasury Bill Fund (“TBILL Fund” or “Fund” or “Token Issuer”) is the first regulated U.S Treasury Bills Fund that is offered 24/7/365 on-chain through the OpenEden TBILL Vault (“OE TBILL Vault”). The OETBILL Vault is deployed natively on Arbitrum and Ethereum offering a DeFI UI/UX while offering the most institutional-grade and compliant access to U.S. Treasury Bills (“T-Bills”) yield on-chain. Having launched the Fund in April 2023, The TBILL Fund has a 1 year live track record which ranks amongst the longest in the market. Being the only on-chain native vault that utilises smart-contract technologies for settlement, there is much resources and planning from the team to deploy on Arbitrum natively, thereby showcasing the clear commitment to the broader Arbitrum ecosystem.

A Robust Regulatory-First Approach for a Global Audience
OpenEden’s TBILL tokens (“$TBILL”) are issued by The TBILL Fund, which is a British Virgin Islands Financial Services Commission (“BVIFSC”) regulated professional fund established under the British Virgin Islands Securities and Investment Business Act 2010. The bankruptcy-remote TBILL Fund is managed by OpenEden’s affiliated entity, which is a Registered Fund Management Company regulated by the Monetary Authority of Singapore (“MAS”). The investment manager of the TBILL Fund operates under an investment mandate to invest in short-dated T-Bills. $TBILL tokens of the Fund can be offered to Non-U.S Professional Investors defined under BVI SIBA Act and to U.S Accredited Investors defined under U.S Securities Act of 1993 Rule 501a (the Fund had filed SEC Form D Notice to offer under Reg D 506c)

Truly Crypto-native, Transparent and 24/7/365 Real-time Access
$TBILL tokens can be minted instantly 24/7/365 on-chain via the OETBILL Vault using USDC, and $TBILL tokens are held in the investor’s self-custodial wallet. The OE TBILL Vault is currently the market’s only platform that offers real-time, instant on-chain minting of T-Bill backed tokens, thus removing settlement risks and allowing investors to earn yield from the point of minting till the point of redemption, maximising capital efficiency.

Institutional-grade Foundation with Best-in-Class Partners
The TBILL Fund’s portfolio of T-Bills are bought, sold and custodised through the Fund’s licensed Prime Broker, UK FCA registered StoneX Financial Limited, and custodised in the Prime Broker’s licensed sub-custodian, being BNP Paribas Bank, New York in segregated accounts. As the Token Issuer is a regulated fund managed by a regulated fund manager, there are stringent regulatory requirements including the appointment of an independent fund administrator to (i) provide independent daily valuation of the $TBILL token’s NAV; and (ii) participate as an independent multi-sig party for all fund asset transfer transactions as an additional safeguard against fraud. The Fund has also appointed KPMG as its tax advisor and is subject to annual audits on its balance sheet and financials. Ernst & Young has also recently completed an independent audit on the OE TBILL Vault’s critical processes and controls in relation to the TBILL Fund’s KYC procedures, valuation methodologies and the Fund’s asset transfer and custody procedures and controls. OpenEden is proud to have achieved a satisfactory audit report with no critical or high risk findings.

Key Information

1. Expected Yield
~5.05% Yield To Maturity (net of all fees as of 30 April 2024).

2. Expected Maturity
The underlying portfolio has a weighted average maturity of 41 days (as of 30 April 2024) and is expected to stay within 60 days WAM.

3. Underlying Assets
The Fund’s portfolio consists of mainly U.S. Treasury Bills with maturities capped at 6 months and a portion in overnight reverse repurchase agreements fully collateralised by U.S. Treasury Securities.

4. Minimum/Maximum transaction size

USDC
Initial Deposit 100,000
Minimum Subsequent Deposit 1,000
Minimum Redemption Amount 1,000

5. Current AUM for product

As of 30 April 2024
Ethereum Vault US$30,662,209
Arbitrum Vault US$308,920
Total US$30,971,129

6. Current AUM for Issuer
US$30,971,129 (as of 30 April 2024)

7. Volume of transactions LTM
Approximately USDC 48,000,000 (including both deposits and withdrawals)

8. Source of first-loss capital
None.

Basics and background

1. How will this investment improve Arbitrum’s RWA ecosystem?
From a treasury management perspective, the investment into the TBILL Fund via the OE TBILL Vault will provide healthy asset diversification for the Arbitrum treasury which is currently primarily held in Arbitrum native tokens. U.S. T-Bills are considered one of the safest assets in global markets being backed by the “full faith and credit” of the U.S. Federal Government, and will only default when the U.S. government defaults, and currently provide a risk-free yield of over 5%. U.S. Treasury Bills are one of the least volatile asset classes in the world and are uncorrelated to the ARB token’s price. This diversification reduces the volatility of the Arbitrum treasury’s portfolio and aligns with the goal of capital preservation and increasing risk-adjusted returns.

From an ecosystem perspective, investment into native RWA projects on the ecosystem, such as the OpenEden Arbitrum TBILL Vault, shows the Arbitrum foundation’s support and commitment towards driving the growth of the RWA sector on the Arbitrum network. This would instil confidence in the overall RWA sector on Arbitrum and boost participation in RWA projects from different groups of stakeholders on the network. Ultimately, OpenEden’s goal is for Arbitrum to become one of the leading blockchain ecosystems for RWA projects in terms of TVL, composability, utility and activity.

OpenEden is committed to allocating incentives to users of its products launched natively on Arbitrum, aiding in evangelising and promoting greater adoption for the Arbitrum RWA ecosystem. We are already in several conversations with key projects and stakeholders of the broader Arbitrum ecosystem. Even in our future product roadmap, we are already in deep discussions with some Arbitrum-native projects in partnering our second product. Further, from OpenEden’s network of partners, we are also promoting the alignment to Arbitrum and this gives us the potential to aid in cross-sell.

We are truly Arbitrum-aligned given how we have selected Arbitrum ahead of several other blockchains because we firmly believe in what Arbitrum stands for (“Home for DeFi”) and in its superior traits over its current peers. The amount of resources being utilizied to build the first native on-chain vault on Arbitrum with smart contract technology for settlement cannot be understated.

2. Identify key management personnel and individual experience. Also include third parties utilised for managing assets and their qualifications.

Jeremy Ng, Founder
Jeremy is the Founder of OpenEden Group (“Group”) and has over 24 years of experience in institutional finance, fintech, and digital assets. He is also the CEO and Chief Portfolio Manager of Adam Eve Capital the Group’s wholly-owned MAS regulated fund management company that manages the TBILL Fund. Prior to founding OpenEden, Jeremy was Gemini Exchange’s APAC CEO having started the Singapore office in 2020 building the team to 50 and establishing the firm as the #1 fiat on-ramp exchange in Singapore.

Before embarking on his crypto journey, Jeremy spent 20 years in Tier-1 Investment Banks specialising in derivatives. He was Goldman Sach’s Head of Cross Asset Structured Derivatives solutions for Hong Kong & Singapore and also served for 5 years as APAC CEO for Swiss-Headquartered Leonteq, managing their Singapore, Hong Kong and Japan business where he specialised in structured derivatives. Jeremy started his banking career as an Analyst and Portfolio Manager at Goldman Sachs and Morgan Stanley.

Jeremy earned his BBA (Honours) in Finance from the National University of Singapore in 2000 and obtained the Chartered Financial Analyst (CFA) charter in 2002.

Wayne Tan, General Counsel
Wayne is an experienced in-house legal, regulatory and compliance counsel with extensive experience advising on Corporate, IP Commercialization, FinReg/Tech, Payments, Blockchain and Digitalisation matters with over 12 years of experience across private practice and in-house roles.

Wayne specialises in building, implementing and running legal, regulatory and compliance frameworks for regulated entities providing blockchain and digital capital market product services spanning fund management, custody, tokenization, dealing in securities and structured products. He has also been instrumental in advising on and guiding digital asset projects through regulatory and legal issues since 2017, most recently having succeeded in obtaining a major payments institution license for Sygnum bank to carry out digital payment token services in Singapore.

Prior to Sygnum, where he headed their legal and compliance departments between 2021 to 2023, Wayne practised corporate and commercial law at international law firm Duane Morris LLP with a focus on technology and financial regulatory work, specifically with respect to blockchain, payments and licensing.

Wayne graduated with an LL.B and B.SC from the University of New South Wales and is called to the bar in both New South Wales and Singapore.

Duke Du, Technical Lead
Duke is the Technical Lead of OpenEden, bringing over twelve years of experience in technology with a deep focus on fullstack development and blockchain technologies. He previously excelled as the Tech Lead at Bybit Exchange, overseeing the DeFi team’s initiatives in decentralized finance.

Between 2013 and 2018, Duke specialised in both the front-end and back-end development of websites and applications. As his career progressed, he delved into Web3, becoming a Technical Advisor at MoleDAO and a Community Ambassador at Consensys. His efforts in blockchain evangelism have notably included educating nearly a thousand students in China on advanced DeFi topics.

Beyond technical leadership, Duke is an active Web3 Mentor, OpenSource Contributor, and Project Manager. He created a highly regarded Fullstack Solidity Tutorial on GitHub, which has garnered over 1,300 stars.

Duke holds a degree in Automation(Computer Science) from Shenyang Ligong University in China.

Amandis Dhillon, Product Lead
Amandis brings over seven years of experience in product development, technology, and research. His career started at Accenture, where he specialised in software solutions and technology integration. He then progressed to Gemini, focusing on developing innovative crypto derivatives products.

In addition to his roles in established companies, Amandis has worked closely with various tech startups to help them scale their technologies and streamline their product pipelines.

Amandis holds a degree in Electrical and Electronic Engineering from Nanyang Technological University in Singapore.

Michael Kelly, Chief Information Security Officer
Michael is an experienced technology, business and cyber risk professional, with a strong background in information security and strategy for startups, regional companies and multinational corporations across financial, telecommunications, IT, logistics and hospitality industries. He has senior management, private board, and consulting experience to work with companies in advisory, board, and hands-on capacities.

Most recently he worked for six years in cybersecurity and cybersecurity risk in Standard Chartered Bank at the Executive Director and Managing Director level. He was responsible for ensuring cybersecurity was carried out for the global technology base of the company, and for instituting information security governance, policies and practices in the startup ventures unit. He was also responsible for assessing the information security risk for digital asset initiatives in the firm.

Michael assists companies transitioning to digital operations to consider their business in light of risk, security, governance, and the strategy for cloud, blockchain and other emerging technologies.

Asset Management Service Providers
Fund/Token Issuer Hill Lights International Limited (“HLI”) (regulated as a professional fund established under the British Virgin Islands Securities and Investment Business Act 2010)
Investment Manager Adam Eve Capital Pte Ltd (“AEC”) (Registered Fund Management Company regulated under the Securities and Futures Act with the Monetary Authority of Singapore). Adam Eve Capital is a wholly-owned subsidiary of OpenEden Group
Technology Service Provider OpenEden Labs Pte Ltd (“OEL”), a technology services company that developed (and continues to support) the OE TBILL Vault.
Prime Broker StoneX Financial Ltd (UK FCA Regulated)
Sub-Custodian BNP Paribas S.A. New York Branch
Fiat On/Off-Ramp Provider Coinbase Prime
Fund Administrator Protege Fund Services Pte. Ltd.
Fund Auditor TJ Assurance Partners PAC (a member of Parker Russell International Ltd)
Fund Tax Advisor KPMG Services Pte. Ltd.
Independent Auditor Ernst & Young LLP
Legal Counsel to the Fund Bayfront Law LLC
Legal Counsel to the Fund as to matters of British Virgin Islands law Harney Westwood & Riegels Singapore LLP
Legal Counsel to the Fund as to matters of United States law Platt Richmond PLLC
Market Data Provider LSEG
KYC/KYT Provider Elliptic, Veriff, ComplyAdvantage, Shufti Pro

3. Describe any previous work by the entity or its officers/key contributors similar to that requested. References are encouraged.
OpenEden has been through several RFPs similar to the request by the Arbitrum Foundation. The RFPs are requested by either direct users or distribution partners. The following entities (non-exhaustive) had selected OpenEden’s $TBILL product (some exclusively) after thorough due diligence and risk assessments.

  • Ripple
  • Galaxy
  • Defiance Capital
  • Hidden Road Partners
  • Superscrypt
  • HashKey Capital
  • Zodia Custody
  • RakkaR Digital Custody
  • Bitgo Custody
  • Hex Trust Custody
  • UXD Foundation
  • PDAX

User Testimonials

  • OpenEden TBILL Vault impresses with top-tier regulatory compliance, user-friendly design, and 24/7 instantaneous on-chain minting. The strong legal structuring of the product assures investor protection. It’s a game-changer in decentralised finance, and we’re thrilled to be part of this innovative community. - Kento Inami (Founder UXD Protocol)

  • OpenEden TBILL Vault sets the gold standard for security and transparency. Its meticulous legal structuring provides unparalleled protection in unforeseen situations. Deploying our assets to the TBILL Vault means having the utmost legal safeguards, ensuring peace of mind and confidence while generating risk-free yield on-chain. - Arthur Cheong (Founder/CEO Defiance Capital)

  • Adding OpenEden to Zodia’s Gateway provides our clients with access to Treasury-Bills and therefore yield on USDC - further proving the ever close integration of traditional finance with digital assets. - Julian Sawyer (CEO Zodia Custody)

  • The OpenEden TBILL token addresses the opportunity cost of holding stablecoins by offering risk-free yield on chain. OpenEden’s transparent and regulatory-compliant approach, coupled with a user-friendly UI/UX instils confidence in users. I look forward to seeing the team build new use cases with TBILL as financial lego for DeFi. - Superscrypt (Temasek-owned Web3 VC)

We would be pleased to coordinate any introductions to the aforementioned individuals/entities to attest to the quality of OE’s TBILL Vault product offering.

4. Has your entity or its officers/key contributors been subject to an enforcement action, criminal action, or defaulted on legal or financial obligations? Please describe the circumstances if so.
No.

5. Describe any conflicts of interest for your entity and key personnel.
There are no unmitigated conflicts of interest. The Fund has engaged OpenEden Labs (“OEL”) and Adam Eve Capital (“AEC”), both of which are wholly owned Group entities, as technology service provider and investment manager respectively. There has been disclosure of such arrangements in the Fund’s offering documents and the relevant service contracts, investment management agreements and conflicts of interest policies in place. To mitigate operational risks of such conflicts, a third party fund administrator has been appointed by the Fund to serve as an independent multi-signature approver in relation to approving the whitelisting of addresses and transfers between whitelisted wallet addresses.

6. Insurance coverages, guarantees, and backstops
OpenEden has assessed the risks of loss in the context of its issuance of $TBILL and has determined that obtaining insurance coverage is not required due to the legal structuring and technical capabilities of the Fund, OE TBILL Vault and $TBILL.

The Fund is a regulated BVI professional fund which is managed by AEC, a MAS regulated fund management company. AEC and the Fund are subject to strict requirements from their respective regulatory bodies with respect to the independent custody of the Fund’s assets, which underpin the $TBILL token. Ernst & Young has also recently completed an independent audit on the OE TBILL Vault’s critical processes and controls in relation to the Fund’s KYC procedures, valuation methodologies and the Fund’s asset transfer and custody procedures and controls. OpenEden is proud to have achieved a satisfactory audit report with no critical or high risk findings, demonstrating that the Fund has in place good risk control against fraud and mishandling of assets which could potentially cause losses to the $TBILL holders.

The Fund’s investment mandate also limits the Fund’s portfolio to containing only short-term US Government Treasuries (ie. less than 6 month maturity with the current portfolio’s weighted average maturity being less than 50 days), ensuring that the Fund’s assets are liquid. $TBILL holders also have priority over the Fund’s management shareholders in the event of a distribution of the Fund’s assets by way of a legally enforceable subordination deed.

The Fund’s underlying US Government Treasury assets as well as a small amount of USD are also held in segregated accounts with regulated custodians appointed by the Fund, currently UK FCA registered StoneX Financial Limited, with sub-custody handled by BNP Paribas New York. This reduces the risk of loss of the Fund’s underlying assets which back the $TBILL’s NAV through blockchain related hacks or exploits.

The $TBILL itself cannot be transferred to non-whitelisted wallets, the process of which is safeguarded by multi-signature approval process involving independent third party signatories. The OE TBILL Vault also has the technical capability to respond to potential hacks/losses suffered by $TBILL holders by cancelling stolen/misappropriated $TBILLs and re-issuing them to affected $TBILL holders.

7. Historical tracking error in your proposed product, or similar to that being proposed product
None. There is no tracking error because the $TBILL is backed by directly held U.S. Treasury Bills. OpenEden uses live market data provided by London Stock Exchange Group (“LSEG”) to provide 24/7 live price of the $TBILL, which is the reflection of the NAV of the Fund. Unlike some other tokenised RWA products that invest into ETFs which can exhibit tracking error to the underlying assets.

8. Brief reason for above tracking error
Not applicable.

9. Please describe any experience your firm has in working with decentralized organizational structures
While the OpenEden team has not had prior experience working directly with decentralized organisational structures, we are strongly committed to support DAO communities and to provide high-quality treasury management services.

OpenEden has onboarded multiple DAOs as users and thus is familiar and comfortable working with the often unique structures associated with DAOs.

10. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
The total value locked (“TVL”) of the $TBILL is currently approximately US$30,971,129 (as of 30 April 2024).

11. How many of these assets held are present on Arbitrum One, if any?
The current TVL of the $TBILL held on Arbitrum is US$308,920 (as of 30 April 2024). The OpenEden Arbitrum TBILL Vault was officially launched in March 2024 and we expect TVL to increase on Arbitrum as we establish more partnerships with Defi Protocols within the ecosystem.

Plan design

1. Please describe your proposed product, including a description of the underlying assets and, if more than one asset, the proposed allocation among assets and general investment guidelines. Where appropriate, include targeted maturity mix and credit quality. Attach supplementary documents as appropriate.

Proposed Product : OpenEden $TBILL
As previously explained above in this RFP, the issuer of the $TBILL, being the TBILL Fund, is a registered professional fund (“Fund”) established under the British Virgin Islands Securities and Investment Business Act 2010 (“SIBA”) and regulated by the BVIFSC. The TBILL Fund is managed by AEC (as defined above), a wholly owned subsidiary of the OpenEden Group, which operates as a registered fund management company under MAS supervision. The TBILL Fund operates the OE TBILL Vault, a smart contract vault that provides investors with direct exposure to a pool of short-dated U.S. T-Bills and overnight reverse repurchase agreements through the minting of the $TBILL. The $TBILL is backed 1:1 by short-dated U.S. T-Bills and a small portion of U.S. Dollar (“USD”) held in bankruptcy remote segregated accounts in the Fund’s name. $TBILLs can be minted instantly 24/7/365, allowing investors to earn yield backed by the U.S. government on their USDC subscription at the point-of-mint itself, rather than having to wait up to T+2 business days as compared to traditional funds.

The OE TBILL Vault operates on a zero-trust protocol, ensuring that all transactions are fully atomic, automated, transparent and managed on-chain without manual intervention. The protocol smart contract dictates that $TBILL can only be minted in the presence of the underlying asset, USDC, thus ensuring each token is always backed by actual assets. This minimises reliance on trust, making our system more secure and transparent than traditional incumbents. The OE TBILL Vault does not have the capability to freely mint tokens, which significantly reduces the risk of unauthorised token creation.

The OE TBILL Vault is a permissioned protocol, which means that an investor has to meet specific criteria before the investor is eligible to hold $TBILL issued by the Fund. The OE TBILL Vault is currently only accessible to “Professional Investors’’ as defined under SIBA and to U.S. “Accredited Investors’’ within the meaning of Rule 501(a) of Regulation D promulgated under the U.S. Securities Act. $TBILL can only be minted and redeemed via the OE TBILL Vault by whitelisted wallets that have been fully onboarded after completing the Fund’s KYC/KYB process. As a permissioned token, $TBILL are transferable between whitelisted wallets.

The $TBILL is an EIP-20-compliant representation of an investor’s economic interest in the Fund. By depositing USDC and minting $TBILL, the investor will have legal rights to the redemption value of the net assets held by the Fund, proportional to the amount of $TBILL the investor holds relative to the total outstanding supply of $TBILL. The $TBILL minted by the investor are held in the investor’s whitelisted self custodial wallet.

Whitelisted investors are also provided with access to the investor dashboard visible on the OE TBILL Vault dApp. The dashboard provides the investor with a real-time view of their $TBILL balance and their realised and unrealised P/L. Please find the sample screenshot of the investor dashboard displayed below.

investor_dashboard
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Investment strategy

The Fund aims to provide the highest possible level of income generation while maintaining liquidity and maximum safety of principal. Given these requirements, the Fund will be managed according to the following metrics:

  • Target portfolio composition: A pool of short-duration U.S. T-Bills
  • Target weighted-average maturity of portfolio: Less than 6 months

U.S. T-Bills’ credit quality is rated as follows:

  • Moody’s: AAA
  • Fitch: AA+
  • S&P: AA+

Any securities held as safe custody assets by the Fund are deposited in StoneX Financial Ltd.’s sub-custodian, BNP Paribas New York. All investors are able to view the Fund’s portfolio holdings as seen below screenshot on the OE TBILL Vault dApp. The portfolio holdings are updated daily displaying the estimated yield-to-maturity (net of fees), the weighted average maturity, and the individual holdings.

portfolio_holdings
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2. Do investors have any shareholder, investor, creditor or similar rights?
Investors who purchase $TBILL has legal rights governed by the terms of their subscription/purchase of $TBILL as set out in the Fund’s offering documents and T&Cs.

The primary rights of a $TBILL investor are the legal and contractual rights to the net redemption value of the underlying assets held by the Fund, and such rights/claims, including in the event of a distribution of the Fund’s assets where the Fund is being wound up, are ranked ahead of the management shareholders of the Fund via a legally enforceable subordination deed.

For the avoidance of doubt, management shareholders do not have any economic participation rights to the assets of the Fund as management shares are no par value non-participating, non-redeemable, voting shares.

3. Describe the legal and contractual structuring for your product including regulatory bodies overseeing your business and the product and identifying all legal jurisdictions interacting with your product. Attach supplementary documents as appropriate.
The $TBILL issuer, being the TBILL Fund, is a registered professional fund incorporated in the British Virgin Islands and regulated by the BVIFSC. The Certificate of Recognition will be will be provided via private email.

The investment manager of the Fund, being AEC, is a registered fund management company incorporated in Singapore and regulated by the MAS.

As a regulatory requirement for registered professional funds, the Fund has to lodge a Private Placement Memorandum and Subscription/Redemption Agreement with the BVIFSC that documents all the contractual rights of $TBILL holders. The Fund also has to notify the BVIFSC of any appointments of service providers to the Fund.

Every tokenholder has legal and contractual rights to the redemption value of the net assets held by the Fund, proportional to the amount of $TBILL the investor holds relative to the total outstanding supply of $TBILL.

4. Would Arbitrum’s assets be bankruptcy remote from your own entity and its officers/key contributors? If so, please explain the legal and contractual basis. On a confidential, non-reliance basis, provide any third party legal opinions to support the conclusions.
Yes, the Fund’s assets are segregated from the OpenEden Group companies, chiefly AEC (the investment manager), OEL (the technology service provider). . No operational capital of AEC or OEL are commingled with the Fund’s assets.

As per relevant regulatory requirements, the Fund holds its assets with independent and regulated custodians and/or institutions in its own name and not in the name of any other OpenEden Group entity, ensuring proper segregation of assets from the operating accounts of the Fund Manager and Technology Service Provider. Digital wallet transfers from wallets held with licensed custodians are also subject to independent third-party multi-signatory approval from the Fund’s fund administrator to ensure additional control over the Fund’s assets.

Each $TBILL holder’s rights are set out in the Fund’s offering documentation and they have legal and contractual rights to the net redemption value of the underlying assets held by the Fund, and such rights/claims are ranked ahead of the management shareholders of the Fund via a legally enforceable subordination deed. Management shareholders do not have economic participation rights to the underlying assets held by the Fund. All terms are documented in the Private Placement Memorandum (provided in Supplementary documents section).

5. How are Arbitrum’s assets protected vis-a-vis the bankruptcy of the brokerage or applicable financial institution (e.g., bank deposit insurance, securities insurance, etc.)?
The following excerpts are extracted from StoneX Financial Limited’s custody services contract with the Fund.

Any securities which StoneX holds as safe custody assets for their clients will be deposited via their sub-custodian network. The sub-custodian(s) which StoneX use and their credit ratings are identified in the following table:

Sub-custodian Standard & Poor’s Rating Moody’s Rating
BNP Paribas S.A A+ as of 25th April 2022 Aa3 as of 5th July 2022

Under the terms of the custody agreement(s) with StoneX’s sub-custodian(s), each sub-custodian will segregate in its books and registers any clients’ safe custody assets from their own securities. StoneX’s sub-custodian(s) will not have security or similar rights enabling it to dispose of clients’ safe custody assets except to satisfy obligations incurred by clients, or for payment for services related to the clients’ safe custody assets, meaning that clients’ safe custody assets will not be commingled with StoneX’s assets or exposed to the performance of StoneX’s assets.
In providing the custody service, StoneX is subject to the oversight and supervision of its regulator, the Financial Conduct Authority. The arrangements which StoneX has put in place with its sub-custodian(s) give effect, in particular, to the requirements of the Financial Conduct Authority’s CASS Sourcebook, under which StoneX has a regulatory obligation to ensure that any clients’ safe custody assets deposited with a sub-custodian are identifiable separately from its own assets and from the assets of its sub-custodian(s), for the purpose of ring-fencing clients’ assets in order to safeguard their ownership rights.

6. Does the Issuer issue more than one asset? If so, what is the priority relationship between different asset classes?
No. The TBILL Fund Only issues $TBILL as a digital representation of the holder’s investment into the TBILL Fund. The TBILL Fund does not and will not be used to issue other products.

7. Provide a detailed cash flow diagram that shows the flow of funds from ARB/Fiat conversion, investment in underlying asset, payment of expenses, sale of underlying asset, and repayment (Fiat/ARB conversion), including the counterparties and legal jurisdictions involved.
It is our understanding that the Arbitrum Foundation will be swapping ARB token into USDC (ARB) before depositing into OE TBILL Arbitrum Vault. Should the Foundation choose to deposit through the TBILL Ethereum Vault, the process is similar as well. The screenshot of the TBILL dAPP below shows how the Foundation can deposit USDC to mint $TBILL. The funds flow diagram below assumes the Foundation to be depositing into the OE TBILL Arbitrum Vault.

Subscription Flow:

subscription_flow
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  • Arbitrum Foundation’s whitelisted wallet connects to the TBILL Arbitrum Vault and initiates a deposit request by depositing USDC (ARB) into the Vault on the Arbitrum network. Please see the Deposit/Withdrawal box on the screenshot above.

  • The $TBILL smart contract executes the following steps in an atomic settlement process –

    • The latest $TBILL token price is retrieved from the on-chain oracle.

    • USDC (ARB) is transferred to the Fund’s Circle account.

    • $TBILL tokens are minted and are issued to Arbitrum Foundation based on the latest on-chain price.

    • These tokens are deposited into Arbitrum Foundation’s whitelisted wallet for self custody and an automated email notification will be sent to the Foundation.

  • The newly deposited USDC is transferred to the Fund’s Coinbase Prime account. Upon deposit in Coinbase Prime, the USDC is converted to USD before a final transfer is performed to the Fund’s StoneX prime brokerage account. All corresponding transfers occur on the same business day itself.

  • Once the fiat transfer has settled in StoneX, the Investment Manager (“AEC”) invests the deposited USD into T-Bills for a same day settlement transaction. The newly purchased T-Bills are custodised in StoneX’s sub-custodian, BNP Paribas New York in a segregated account.

  • All funds transfers and wallet address whitelisting are controlled by multi-sig approvals involving independent Fund Administrator to ensure proper controls are in place.

Redemption Flow:

redemption_flow
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  • Arbitrum Foundation connects its whitelisted wallet to the TBILL Arbitrum Vault and submits a redemption request. Please see the Deposit/Withdrawal box on the screenshot above. The Foundation will receive automated email notification that a redemption request is accepted.

  • Upon notice of the redemption request, the Investment Manager (“AEC”) liquidates T-Bills into USD fiat through a same day settlement transaction through StoneX.

  • USD fiat in the Fund’s StoneX account is transferred to the Fund’s Coinbase Prime account. Upon deposit, the USD is converted to USDC, and is transferred to the Fund’s Circle account.

  • The newly-deposited USDC in the Fund’s Circle account is then transferred to the TBILL Arbitrum Vault.

  • This initiates the activation of the redemption queue on the $TBILL smart contract vault, an atomic process that results in –

    • The most recent $TBILL price is fetched from the on-chain price oracle.

    • The $TBILL tokens present in the withdrawal queue are burned.

    • The corresponding amount of USDC (ARB) is transferred to the Foundation’s approved address.

  • Additionally, the Foundation will receive an automatic email notification confirming the successful processing of the redemption request.

  • All funds transfers are controlled by multi-sig approvals involving independent Fund Administrator to ensure proper controls are in place.

8. Describe anticipated tax consequences (if any) in transacting on the underlying and/or receipt of yield.
The Fund is not qualified to provide tax advice to existing and potential investors due to the evolving nature of how tokens may be treated for tax purposes (in the hands of the tokenholders or with respect to revenue generated by the issuance of the same). Please seek advice from a qualified tax advisor on anticipated tax consequences prior to investing into $TBILL tokens.

9. Describe the process and expected timeline for liquidation of assets, if given instructions to do so by Arbitrum governance.
As described in the above section titled “Redemption Flow”, the Arbitrum Foundation can redeem their $TBILL tokens for USDC from the OE TBILL Vault by initiating a redemption request either on the OE TBILL Vault’s dapp interface or directly through the OE TBILL Vault smart contract. All redemption requests are processed typically within T+1 U.S. Business Day. There is no lock-up period.

Please note that there will also be designated market makers (such as Galaxy, Keyrock, STS etc) who can offer secondary liquidity through OTC transactions should the Arbitrum Foundation needs to have instant redemptions.

10. What amount of first-loss equity will Sponsor provide to ensure over-collateralization, how is the first-loss equity denominated, and what is the source of capital?
There is no first-loss equity provided by the Issuer.

11. Describe the liquidity and stability of the proposed underlying assets, including anticipated settlement times from the sale of the underlying to the repayment of ARB.
U.S. T-Bills trade more than $100 billion on a daily basis and is the world’s most liquid asset. It trades almost 24 hours a day on US business days from Tokyo 8am open to New York 5pm close. T-Bills can be traded (buy and sell) with same day settlement, therefore the Fund expects to process redemption within T+1 US business days.

12. If relying on the blockchain for any of the transactional flows, please describe any blockchain derived risks and mitigations.
In managing blockchain-derived risks, OpenEden adheres to stringent security protocols, particularly concerning our smart contract operations. Prior to any deployment or upgrade of smart contracts, we mandate comprehensive audits conducted by third-party security firms. These audits are essential to identify and rectify vulnerabilities, ensuring the integrity and security of our blockchain transactions.

Furthermore, OpenEden implements strict access controls to enhance the security of both on-chain and off-chain treasury management. We employ the dual control principle, which requires multiple authorizations for critical actions, thereby minimising the risk of unauthorised access or fraudulent activities. Additionally, we uphold the principle of segregation of duties across different operational roles to prevent conflicts of interest and promote accountability within our processes.

OpenEden is also committed to strengthening our cybersecurity practices across all areas of operation. We are actively working towards achieving ISO 27001 security compliance, a widely recognized standard that will further fortify our cyber defence mechanisms.

13. Does the product rely on any derivative product (swaps,OTC agreements)?
No.

14. List all the third party counterparties linked to your assets including and not restricted to prime broker if any, custodian, reporting agent, banks for derivatives or loans and provide primary contact details for the third party counterparties
Fund Hill Lights International Limited (“HLI”) (regulated as a professional fund established under the British Virgin Islands Securities and Investment Business Act 2010)
Technology Service Provider OpenEden Labs Pte Ltd (“OEL”), a technology services company that developed (and continues to support) the OE TBILL Vault.
Investment Manager Adam Eve Capital Pte Ltd (“AEC”) (Registered Fund Management Company regulated under the Securities and Futures Act with the Monetary Authority of Singapore). Adam Eve Capital is a wholly-owned subsidiary of OpenEden Group
Prime Broker StoneX Financial Ltd (UK FCA Regulated)
Sub-Custodian BNP Paribas S.A. New York Branch
Fiat On/Off-Ramp Provider Coinbase Prime, Circle
Fund Administrator Protege Fund Services Pte. Ltd.
Fund Auditor TJ Assurance Partners PAC (a member of Parker Russell International Ltd)
Fund Tax Advisor KPMG Services Pte. Ltd.
Independent Auditor Ernst & Young LLP
Legal Counsel to the Fund Bayfront Law LLC
Legal Counsel to the Fund as to matters of British Virgin Islands law Harney Westwood & Riegels Singapore LLP
Legal Counsel to the Fund as to matters of United States law Platt Richmond PLLC
Market Data Provider LSEG
KYC/KYT Provider Elliptic, Veriff, ComplyAdvantage, Shufti Pro

15. Can you explain how risk management (inv and operational) is being done? Can you provide a copy of your risk management policy?

Operational Risk Management
At OpenEden, we ensure operational security through a robust risk management approach that combines strict access controls with proactive monitoring. We utilise dual control and multi-signature protocols, requiring multiple authorizations for critical transactions and system accesses, supported by firm approval policies on platforms like Coinbase and Circle.

Some key aspects of our risk management includes:

  1. Strict Access Control: We enforce rigorous access requirements, utilising multi-factor authentication and role-based access controls to safeguard all system interactions.
  2. Real-Time Monitoring and Alerts: Our internal Slack channels are configured to instantly notify stakeholders of any unauthorised changes or price updates, enabling quick response and thorough investigation.
  3. On-Chain Price Guards: We deploy on-chain mechanisms to validate price updates before they affect oracles, with automatic halts in operations if discrepancies are detected to prevent erroneous data from impacting our operations.

For detailed insights into our risk management strategies and protocols, a copy of our Technology Risk Management Policy will be provided via private email.

Investment Risk Management
AEC, the investment manager of the Fund, has entered into an Investment Management Agreement with the Fund which dictates the investment strategy and mandate. There are also valuation policies that the investment manager adheres to. Both can be provided upon request.

The manager takes a ladder approach when managing the underlying portfolio by diversifying across different maturities of the Treasury curve. The current weighted average maturity is ~41 days reflecting a very low duration risk and the portfolio is invested in the most liquid part of the curve.

It is important to note that OpenEden has recently completed an independent audit by Ernst & Young who performed a thorough review on the OE TBILL Vault and its processes which also included the investment manager’s handling of valuation and custody of the underlying assets of the Fund, covering the investment manager’s control over the purchase, sale, valuation and reconciliation of the underlying USD T-Bills and USD balances of the Fund. More details on this Independent Audit is provided in the below section on Audit.

Performance reporting

1. What are your proposed performance benchmarks? If this is substantially different from the underlying assets, please explain why.
U.S. 3 to 6 Month Treasury Bill

2. Describe the content, format, preparation process, and cadence of performance reports. This should include proof of reserves, if appropriate. Please include a sample report.
OE TBILL Vault dApp displays the live Total Value Locked, TBILL price, historical TBILL price chart, and the NAV reports produced by the independent Fund Administrator (Protege Fund Services Pte. Ltd).

The content of this report includes the Income Statement, Balance Sheet, subscription and redemption activity of the fund, and the performance of NAV per Token of the Fund. The Fund Administrator has independent access to the Fund’s accounts held with various services providers to which they review the Fund’s activity and transaction records for said day and month. Every investor of the Fund receives a personalised monthly investor statement showcasing their $TBILL balance and the value of their investment in the Fund through a personalised login to the Fund Administrator’s online investor portal. Sample Daily and Monthly NAV reports will be sent via private email.

3. Who provides the performance reports in respect of the underlying assets?
The NAV reports are prepared by Fund Administrator, Protege Fund Services Pte. Ltd.

4. Describe any formal audit process and timing of such audits.
Annual fund financial audits are conducted by TJ Assurance Partners PAC (“TJA”), a Singapore-registered public accounting corporation with the Accounting and Corporate Regulatory Authority and a member firm of Parker Russell International Ltd, in accordance with regulatory reporting requirements.

A very important point we wish to highlight is that OpenEden has recently completed an independent audit by Ernst & Young LLP who performed a thorough review of critical aspects of the OE TBILL Vault, which included the investment manager’s policies, controls and procedures concerning AML/KYC, custody and valuation of the Fund’s assets (both digital and TradFi) in accordance with applicable Monetary Authority of Singapore (“MAS”) guidelines and leading industry practice for asset managers.

The design and operations of the following internal controls were reviewed –

  1. Adherence with applicable/relevant MAS Notice and Guidelines on Prevention of Money Laundering and Countering the Financing of Terrorism (“AML/CFT”), including sufficient AML risk assessment methodology focusing on the following areas:

    • Customer due diligence during onboarding and ongoing basis including corroborating source of funds and source of wealth (where applicable)

    • Adequate Transaction Monitoring processes including transactions involving transfer of digital asset/ stable coin as well as adherence to travel rule (where applicable)

    • Adequate Name Screening controls (including wallet screening where applicable)

    • Adequate Suspicious Transaction reporting controls focusing on maintenance of records and timeliness of reporting procedures

    • Adequate policies and procedures on the methodology to identify, assess and monitor the enterprise-wide ML/TF risk

  2. Custody arrangement policies and procedures in place to demonstrate sufficient governance and oversight by Board of Directors /senior management as well as ensuring that independent custodians are suitably licensed, registered or authorised in their respective jurisdictions in line with the requirements from MAS Guidelines on Licensing, Registration and Conduct of Business for Fund Management Companies as well as Securities and Futures (Licensing And Conduct Of Business) Regulations.

  3. Adequate controls and oversight is in place for:

    • The deposit process (i.e. depositing USDC token from customer’s private wallet into custodian account) with appropriate assessment to ensure that custody service provider maintains adequate risk management controls to ensure integrity and security of customer’s digital payment token.

    • The transfer from custodian account to brokerage account process (i.e. transfer of US dollar from custodian account to brokerage account).

    • The withdrawal process (i.e. USDC token withdrawal from custodian account to customer’s private wallet).

    • For segregation of customer’s assets from their own assets to mitigate loss or misuse of customer’s assets.

  4. Adequate disclosure of custody arrangements, terms and conditions and attendant risks to customers.

  5. Appropriate segregation of duties to prevent conflict of interests (if applicable), including adherence with limits of authority.

  6. Valuation policies and procedures in place to demonstrate sufficient governance and oversight by Board of Directors /senior management.

  7. Assets under management are subject to independent valuation and customer reporting.

  8. Adequate controls and oversight is in place for the calculation of Net Asset Value (“NAV”) by the Fund in accordance with AEC’s Pricing Policy focusing on the following areas:

    • Review the appropriateness of the governance, controls and oversight of the valuation methodology in AEC’s Pricing Policy
    • Review the source of valuation (i.e., the fair value) of each of the three asset components (i.e., US dollar, USDC and US Treasury Bills) that make up the NAV of the TBILL token.
    • Adequate controls and oversight is in place for the review of Net Asset Value calculated by the Fund, including review of the daily reconciliation of the calculation of the NAV by the fund manager which includes reconciliation of the number of TBILL tokens at the Valuation Point.
    • Fund performance reports on Net Asset Value (if applicable) are timely and adequately prepared, reviewed and approved prior to presentation to stakeholder(s).

Upon completion of the review, Ernst & Young assigned a Satisfactory rating (being the 2nd highest rating possible) to the independent audit report. Ernst & Young were satisfied that elements of the internal control structure provide reasonable assurance that the relevant risks to the Investment Manager’s operating activities are adequately controlled.

Pricing

1. Provide a copy of your standard contract, or one similar to what is being proposed here.
The following documents will be sent via email.

  • The Private Placement Memorandum (Non-U.S.)
  • Subscription and Redemption Agreement (Non-U.S.)

2. Fee summary: Inclusive of the full scope of services requested. Product Fee schedule If asset based Fee calculation for our plan if asset based Annual fee if flat fee Any other fees (including redemption or minting fees)
Minting/Redemption Fee 0.05% (will be waived for Arbitrum Foundation with >$5 million investments)
Total Fund Expense Ratio 0.30% per annum, accrued daily

3. Describe frequency of fee payment and its position vis-a-vis payment priority compared with other expenses (i.e., cash waterfall)
Total Fund Expense Ratio of 0.30% p.a. is charged daily on the current TVL and reflected on the $TBILL Token price.

Smart Contract/Architecture

1. How many audits have you had and name of auditors? Please provide a copy of reports.

Verichains Lab, 29 March 2023

Hacken, 31 October 2023

2. Is the project permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
Yes, only users who have fully cleared KYC and satisfied the Fund’s onboarding requirements will be whitelisted. Only whitelisted addresses can interact with the TBILL Vault dapp and hold $TBILL. Transfers are only permissible between whitelisted addresses. Additionally, the vault has a blacklisting feature, where addresses identified as blacklisted are prohibited from transferring or interacting with the OE TBILL Vault, including subscribing for or redeeming $TBILL tokens.

3. Is the product present on several chains? Are there any cross chain interactions?
The product is available on Ethereum and Arbitrum networks. There are currently no cross-chain interactions between $TBILL on the two networks, though there may be plans for such integrations in the future.

4. Are the RWA tokens being used in any other protocols? Please describe the various components of the ecosystem
$TBILL tokens have been accepted as eligible collateral on Hidden Road Partners through a tri-party agreement between OpenEden, Zodia Custody and Hidden Road Partners. Discussions are currently ongoing for $TBILL to be used as collateral on lending/borrowing DeFi protocols, perpetual exchanges and others.

5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
All actions which require admin intervention (such as asset transfers between venues, modification of the USDC deposit address, etc) are protected by multi-sig or multi-approval mechanisms to prevent any single admin user from executing any actions individually. The Fund Administrator is also part of the list of multi-sig approvers to provide external third-party oversight over such actions.

Importantly, the OE TBILL Vault operates with a strict protocol where $TBILL tokens can only be minted in the presence of the underlying asset, USDC. This process is entirely managed on-chain, distinguishing it from other systems where manual token issuance might occur. The vault does not possess the authority to freely mint tokens; it can only mint $TBILL tokens when equivalent USDC deposits are confirmed, ensuring that token creation is always backed by actual assets. This key feature minimises trust reliance, making our system inherently more secure and transparent compared to traditional incumbents in the space.

6. Is there any custom logic required for your RWA token? If so please give any details.
No, the $TBILL is a standard ERC-20 token.

Supplementary

1. Please attach any further information or documents you feel would help the screening committee or ARB tokenholders make an informed decision.
The following documents will be sent via private email.

  • Private Placement Memorandum (Non-U.S.)

  • Subscription and Redemption Agreement (Non-U.S.)

  • HLI BVIFSC Certificate of Recognition

  • Investment Management Agreement

  • Subordination Deed

  • Technology Risk Management Policy

  • Sample Monthly NAV Report for March 2024

  • Sample Daily NAV Report for 19 April 2024