SemiLiquid launched its Programmable Credit Protocol (PCP) at Abu Dhabi Finance Week 2025 on December 8, 2025. It's custody-native infrastructure. Institutions can activate credit against digital and tokenized assets held in custody, without transferring that collateral. The protocol was developed and launched in Abu Dhabi. It's now planned for global rollout, positioning the emirate as a launchpad for this specific category of institutional financial innovation.
The Problem PCP Is Built to Solve
Tokenized assets are projected to reach $10 trillion by 2030. But credit infrastructure supporting those assets has stayed trapped in legacy workflows. Most institutional lending against assets still requires physically or contractually moving collateral to a lender. That process eliminates the ability to earn ongoing yield on that collateral. It also introduces counterparty and operational risk during the transfer itself.
How the Pilot Actually Demonstrated This
The launch is backed by a successful pilot conducted with Franklin Templeton, Zodia Custody, Avalanche, Presto Labs, M11 Credit, Oasis Foundation, and CMS. Franklin Templeton's daily-yielding tokenized money-market fund, BENJI, was used as collateral in the pilot. It remained encumbered throughout the loan lifecycle under pre-agreed terms and automated triggers. This simulated proof-of-concept let institutions keep full daily yield on the fund, while still granting lenders enforceable security over the assets. It eliminated counterparty risk without any collateral movement at all.
What "Programmable Credit" Actually Means
Rico van der Veen, Co-Founder and CEO of SemiLiquid, said programmable assets require programmable credit. He described PCP as delivering the missing rail institutions need: a standardized, custody-native, shared legal framework merging the trust of traditional finance with the efficiency of programmable assets. In practice, loan terms, encumbrance conditions, and automated triggers get encoded directly into the credit arrangement. They're not managed through separate, manually enforced legal agreements layered on top of a static asset transfer.
Why Avalanche's Infrastructure Was Chosen
Khalid Dannish, Head of MENA at Ava Labs, said Avalanche's high-performance, institutional-grade infrastructure, combined with SemiLiquid's programmable credit protocol, creates a clear path to scaling institutional adoption. He noted this was developed in a region that has become a launchpad for next-generation on-chain financial markets.
The Legal Framework Behind the Pilot
Matthew Nyman, Digital Assets Lead at CMS, said private credit is going digital, and this pilot proves how it can be done legally and compliantly. CMS supported the infrastructure bringing automated, custody-native credit to institutional markets. That legal-compliance validation matters for institutional adoption. A technically elegant credit mechanism isn't useful to regulated institutions unless it also satisfies enforceable legal requirements around collateral and security interests.
What Comes Next: Phase II
SemiLiquid says the pilot has shown the underlying technology and legal framework are mature and institutions are ready. The company is advancing to Phase II, launching in early 2026. That next phase will expand integrations across additional custodians, collateral types, and jurisdictions. Future capabilities include under-collateralized lending supported by verified solvency attestations and a unified framework for enforceability across markets.
Institutional credit infrastructure built around custody-native, non-transfer collateral models like SemiLiquid's reflects the same trust-preserving approach seen in T-REX Network and Zama's confidentiality infrastructure for RWA tokenization. Both target institutional requirements that go beyond typical retail DeFi lending mechanics.
Glossary
- Custody-native infrastructure: Financial infrastructure designed to operate directly within an asset's existing custody arrangement, without requiring the asset to be moved or transferred.
- Encumbered asset: An asset that has a legal claim, such as a lien or lender's security interest, attached to it, restricting its free transfer.
- Tokenized money-market fund: A traditional money-market fund whose ownership shares are represented and tracked as blockchain-based tokens.
Disclaimer
This write-up is informational in nature and does not serve as financial or investment advice. Institutional credit products carry counterparty, market, and legal risk. Confirm current details directly through official SemiLiquid announcements.
