Tokenization of U.S. Treasury Notes Surpasses $1 Billion on Public Blockchain

US Treasury note with blockchain graphic on the right

The market for tokenized U.S. Treasury debt is experiencing significant growth. According to data compiled by Tom Wan, an analyst at crypto firm 21.co, the market value of Treasury notes tokenized on public blockchain such as Ethereum, Polygon, Avalanche, Stellar, and others has exceeded $1 billion for the first time.

Tokenized Treasuries are digital representations of U.S. government bonds that can be traded as tokens on blockchain platforms. This market’s value has surged nearly tenfold since January 2023 and has seen an 18% increase since the announcement of the Ethereum-based tokenized fund BUIDL by traditional finance giant BlackRock on March 20.

At present, BUIDL stands as the second-largest fund of its kind, with a tokenized value of $245 million. It follows Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX), represented by the BENJI token, which leads with $360.2 million in deposits.

In a recent update, Wan shared, “Just happened, $1B Total Tokenized U.S. Treasuries on Public Blockchains. Blackrock’s BUIDL increased by 400% from 40M to 240M supply in a week.” Additionally, OndoFinance has emerged as the largest holder of BUIDL, possessing 38% of the total supply, thus backing Ondo’s OUSG fully with BUIDL.

Tokenized government securities by product on public blockchain
Tokenized government securities by product (21.co, Dune)

The sharp increase in Treasury yields over the past two years has heightened demand for their tokenized counterparts. The 10-year yield, known as the risk-free rate, has surged from 1.69% to 4.22% since March 2022, reducing the attractiveness of lending and borrowing dollar-pegged stablecoins in the decentralised finance market.

Investing in tokenized Treasuries offers crypto investors an opportunity to diversify their portfolios, enabling them to settle transactions at any time of day. Wan highlighted the advantage of tokenization, emphasising that transactions can be settled 24/7.

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