United States Treasury assets tokenized on public blockchains have surpassed $1 billion, as traditional financial institutions continue to migrate securities onto blockchain platforms during a period of extended high interest rates.
Data collected by 21.co and Dune Analytics reveals that tokenized government securities reached $1.07 billion in value as of March 28, spread across 17 different products. The majority of these assets are hosted on the Ethereum, Polygon, and Stellar networks.
Franklin Templeton, an investment firm, leads the pack with assets totaling over $360.1 million, representing 33.6% of the market share through their Franklin OnChain U.S. Government Money Fund (FOBXX). Launched in 2021, this tokenized fund operates on the Polygon and Stellar blockchains and is symbolized by the BENJI token.
In second place is BlackRock’s USD Institutional Digital Liquidity Fund, known as BUILD, which has tokenized assets worth $244.8 million, making up 22.8% of government Treasurys tokenized on the blockchain.
U.S. Treasury securities represent debts issued by the federal government, with investors providing funds to the government in exchange for repayment of the principal amount plus interest on a specified date.
The attractiveness of government treasuries to investors has increased due to rising interest rates in the United States in recent years. As of March, the U.S. Federal Reserve has maintained benchmark interest rates at a 23-year high, ranging between 5.25% and 5.50% to combat inflation. In 2023, blockchain-based digital tokens representing U.S. Treasury securities saw a staggering 641% increase.
Tokenizing U.S. Treasurys on a blockchain involves creating digital tokens that represent ownership of the underlying security, changing the way securities are issued, traded, and managed, offering increased liquidity and lowering the barrier to entry for investors with limited capital. Major financial institutions such as UBS and JPMorgan have entered the asset tokenization space, aiming to bridge traditional financial assets with blockchain technology.
Crypto projects are also tapping into tokenized U.S. Treasurys to support their operations. For example, Decentralized finance platform Ondo Finance is now the primary holder of BlackRock’s BUILD fund, owning 38% of the supply, as per Tom Wan, a data analyst at 21.co.
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