Tokenized Treasuries have surpassed $8.63 billion in market capitalization, marking a significant milestone in the integration of blockchain technology with traditional finance. This growth reflects a broader shift in how institutions are beginning to view tokenized real-world assets—not merely as passive yield instruments, but as functional collateral for trading, lending, and repo transactions.
The recent surge in tokenized Treasuries has been fueled by increased institutional involvement and the expansion of blockchain-based settlement infrastructure. BlackRock’s BUIDL fund remains the dominant player in the space, accounting for approximately $2.85 billion, or roughly one-third of the total market. Other notable contributors include Circle’s USYC ($866 million), Franklin Templeton’s BENJI ($865 million), and Fidelity’s new tokenized money-market fund, which has already reached $232 million since its launch.
These tokenized funds, which represent digital versions of U.S. Treasury securities, are being increasingly accepted by exchanges and banks as legitimate forms of collateral. A pivotal moment occurred in June when Crypto.com and Deribit began accepting BUIDL as collateral. By September, Bybit took a further step by approving QCDT—a tokenized MMF backed by U.S. Treasuries and regulated by the Dubai Financial Services Authority—for use in its trading platform. This allows professional clients to post QCDT instead of cash or stablecoins, enabling them to earn interest from the underlying Treasury assets while maintaining exposure to their trading positions.
In the realm of traditional finance, Singapore’s DBS Bank became a trailblazer by integrating tokenized funds into its operational framework. DBS added Franklin Templeton’s sgBENJI to its digital exchange, enabling clients to trade and lend these assets. It also began using them in pilot programs as collateral for repo and credit transactions. This marks a shift from viewing tokenized MMFs as static holdings to treating them as active components of the financial system.
At the infrastructure level, significant progress has been made to bridge the gap between traditional finance and blockchain networks. A notable development came from a collaborative pilot between Chainlink, Swift, and UBS Tokenize. The initiative successfully tested the use of ISO 20022 messaging—a global standard for financial communication—to handle subscriptions and redemptions of tokenized funds. This breakthrough allows banks and custodians to interact with blockchain-based assets using the same systems they use for traditional securities, improving interoperability and reducing friction.
This interoperability is a critical step toward mainstream adoption. Historically, tokenized assets operated in isolated environments, requiring bespoke integration with banking systems. The use of standardized messaging enables seamless communication between financial institutions and blockchain platforms, enhancing operational efficiency and scalability.
Despite rapid growth, the tokenized Treasury market is still concentrated among a few major players. BlackRock leads with a substantial market share, but funds from Franklin Templeton, Circle, and Ondo Finance are gaining traction. This diversification is vital for broadening liquidity and increasing the likelihood of wider collateral acceptance by financial institutions that prefer diversified risk exposure.
Regulatory constraints, however, continue to be a barrier to broader participation. Most tokenized Treasury funds are available only to Qualified Purchasers under U.S. securities laws, limiting access to institutional investors and high-net-worth individuals. Additionally, tokenized MMFs, like their traditional counterparts, have cut-off times for redemptions and subscriptions. This creates potential liquidity bottlenecks during times of market stress, making them less flexible than 24/7 crypto assets.
Furthermore, these funds still operate on relatively illiquid markets and rely on blockchain settlement cycles, which can be slower than traditional clearing systems. As a result, many exchanges apply a discount when valuing tokenized Treasuries as collateral, reflecting the additional risk and complexity involved.
Looking forward, the future of tokenized Treasuries appears promising. The transition from pilot programs to full-scale production is already underway, and the growing involvement of major financial institutions signals increasing confidence in the model. With improved infrastructure, standardized messaging, and regulatory clarity, tokenized RWAs are poised to play a more integral role in capital markets.
The benefits of tokenized Treasuries go beyond simple digitization. They offer real-time transparency, programmable features, and the potential for automated compliance through smart contracts. These qualities make them attractive not only for trading and collateral but also for treasury management, cross-border settlement, and liquidity provisioning.
Moreover, tokenized government securities could offer a lifeline to emerging markets. By enabling fractional ownership and 24/7 access, these instruments could democratize access to high-quality assets and improve financial inclusion. Smaller financial institutions and fintech platforms might use tokenized Treasuries to offer yield-bearing products to customers without needing to build complex back-end infrastructure.
As central banks and regulators begin to explore digital currencies and programmable money, tokenized Treasuries could become a foundational layer in the future of digital finance. Their integration into repo markets, lending, and even central bank operations could streamline liquidity management and reduce systemic risk.
In the long term, tokenized RWAs might also enable new forms of financial engineering. For example, combining tokenized Treasuries with decentralized finance (DeFi) platforms could create hybrid products that merge the safety of government debt with the efficiency of blockchain. These innovations could redefine how capital is allocated and managed in a digitized global economy.
Overall, the rise of tokenized Treasuries represents more than just a technological upgrade; it signifies a structural transformation in how financial assets are issued, traded, and settled. As adoption accelerates, the convergence of traditional finance and blockchain is not only inevitable—it’s already happening.