This week, the market value of tokenized U.S. Treasuries exceeded $5 billion for the first time, as demand for blockchain-driven real-world assets (RWAs) continues to rise.
The asset class increased by $1 billion within just two weeks, primarily driven by inflows into BlackRock and Securitize, the latter being a leader in the digital asset sector.
Crypto tokens supported by U.S. Treasuries are leading the charge in the tokenization movement, grabbing the attention of numerous global financial giants and digital asset companies. Recently, Fidelity Investments became the latest major U.S. asset manager to seek regulatory approval for a tokenized money market fund, applying to establish its Fidelity Treasury Digital Liquidity on the Ethereum blockchain.
“Tokenization holds significant promise and can be transformative for the financial services sector, enhancing transactional efficiencies and improving capital access and allocation across markets,” stated the head of Fidelity Digital Asset Management.
Tokenized Treasuries provide a new avenue for investors to utilize idle cash on blockchains for generating yields, akin to a money market fund. They are increasingly being employed as reserve assets within decentralized finance (DeFi) protocols. Another notable application is leveraging these tokens as collateral in trading and asset management.
“In evaluating various use cases, utilizing a tokenized asset as non-cash collateral can enhance operational frameworks and improve capital efficiency,” she emphasized.
Her sentiments resonate with those of the chief product officer at State Street, another major financial and asset management company based in Boston, which is also delving into bond and money market fund tokenization. She previously remarked that collateral tokens might have mitigated, if not prevented, the “liability-driven” crisis of 2022, enabling pension funds and asset managers to rely on money market fund tokens for margin calls rather than liquidating assets for cash.
Further insights: Tokenization Enables More Efficient Collateral Transfers, In a Collaborative Effort Between Digital Asset Firms, Euroclear, and the World Gold Council.
The upward trajectory shows no signs of slowing down.
Securitize indicated earlier today that BUIDL is poised to exceed $2 billion in assets by early April, having recently reached $1.7 billion. In addition, Spark, an ecosystem partner of the stablecoin issuer, plans to allocate $1 billion to BUIDL, Superstate’s USTB, and Centrifuge’s fund managed in collaboration with Anemoy and Janus Henderson.