$1 Billion Milestone for Tokenized Treasury Market Amidst Rising Demand

The market for tokenized U.S. Treasury debt has surpassed $1 billion, marking a significant surge in value since January 2023. Led by the launch of BlackRock's Ethereum-based tokenized fund BUIDL and the growth of Franklin Templeton's BENJI token, these digital representations of government bonds offer investors diversification and 24/7 trading opportunities amidst rising Treasury yields.

Tokenized Treasury Market Surpasses $1 Billion, Driven by Growing Demand

The burgeoning market for tokenized U.S. Treasury debt has reached a significant milestone, surpassing $1 billion in market value for the first time. This rapid growth, driven by rising Treasury yields and the increasing appeal of tokenized investment vehicles, has positioned this nascent market as an attractive diversification option for crypto investors.

According to data compiled by Tom Wan, an analyst at crypto firm 21.co, the value of Treasury notes tokenized on public blockchains, including Ethereum, Polygon, Avalanche, Stellar, and others, has soared tenfold since January 2023. This surge is further compounded by an 18% increase subsequent to the announcement of BUIDL, an Ethereum-based tokenized fund launched by financial behemoth BlackRock in March 2023.

BUIDL currently ranks as the second-largest fund of its type, boasting a tokenized value of $245 million. It trails behind Franklin Templeton's Franklin OnChain U.S. Government Money Fund (FOBXX), represented by the BENJI token, which dominates with a balance of $360.2 million.

Wan recently remarked, "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." Notably, OndoFinance has emerged as the paramount holder of BUIDL, possessing 38% of the total supply and fully backing Ondo's OUSG with BUIDL.

The surge in Treasury yields over the past two years has played a pivotal role in fueling demand for tokenized Treasury debt. The 10-year yield, considered a risk-free rate, has escalated from 1.69% to 4.22% since March 2022, reducing the allure of lending and borrowing dollar-pegged stablecoins in the decentralized finance (DeFi) market.

Investing in tokenized Treasuries presents crypto investors with an avenue to diversify their portfolios and settle transactions round the clock. Wan emphasized the inherent advantage of tokenization, highlighting the ability to execute transactions 24/7.

The tokenized Treasury market's growth trajectory is expected to persist, fueled by the continued demand for alternative investment options, the increasing accessibility of tokenized assets through exchanges and custodians, and the regulatory clarity that is gradually emerging in this burgeoning sector. As the market matures, it is anticipated that institutional investors will play a more substantial role, further boosting the adoption and liquidity of tokenized Treasury debt.