Tokenized U.S. Treasuries Surpass $5 Billion, Driven by BlackRock and Securitize

Tokenized U.S. Treasuries have reached a significant milestone, surpassing $5 billion in market value this week. This surge in demand for blockchain-based real-world assets (RWAs) highlights the growing interest and investment in this sector. The asset class experienced a rapid growth of $1 billion over just two weeks, primarily driven by inflows into BlackRock's and Securitize's BUIDL, which is currently the market leader.

Tokenized Treasury products are at the forefront of the tokenization trend, attracting major global financial institutions and digital asset firms. Fidelity Investments, a prominent U.S. asset manager, has recently filed for regulatory approval to launch its Fidelity Treasury Digital Liquidity on the Ethereum blockchain. This move underscores the potential of tokenization to revolutionize the financial services industry by enhancing transactional efficiencies and capital allocation across markets.

Cynthia Lo Bessette, head of Fidelity Digital Asset Management, emphasized the transformative potential of tokenization. She noted that tokenized Treasuries allow investors to earn a yield by parking idle cash on blockchains, similar to a money market fund. These tokens are increasingly being used as reserve assets for decentralized finance (DeFi) protocols and have significant potential as collateral in trading and asset management. Bessette highlighted that using tokenized assets as non-cash collateral to satisfy margin requirements could improve operational infrastructures and enhance capital efficiency.

This perspective is shared by Donna Milrod, chief product officer of State Street, another major asset management and banking giant. Milrod previously mentioned that collateral tokens could have mitigated the "liability-driven" crisis in 2022 by allowing pension funds and asset managers to use money market fund tokens for margin calls, thereby avoiding the need to liquidate assets to raise cash.

The growth trajectory of tokenized Treasuries is expected to continue. Securitize has announced that BUIDL is on track to surpass $2 billion in assets by early April, up from its current $1.7 billion. Additionally, Spark, the ecosystem partner of DAI stablecoin issuer Sky, plans to allocate $1 billion to BUIDL, Superstate's USTB, and Centrifuge's fund managed with Anemoy and Janus Henderson. These developments indicate a robust and expanding market for tokenized Treasuries, driven by the increasing recognition of their benefits and potential applications.