Recent minutes from the US Department of the Treasury, published on October 30, indicate a growing interest in short-term US government bonds, specifically Treasury bills, driven by the rise of stablecoins. During a meeting on October 29, members of the US Treasury’s Borrowing Advisory Committee discussed the implications of stablecoin adoption and the potential tokenization of Treasury bills. One member proposed the establishment of a permissioned blockchain specifically for T-bills, as noted in the minutes.
These remarks reflect an emerging willingness among US officials to explore the integration of blockchain technology within the nation’s financial framework. According to one committee member, the increasing prevalence of stablecoins—most of which are reportedly backed by Treasury bills or Treasury-backed repurchase agreements—has likely contributed to a slight uptick in demand for short-term Treasury securities.
The committee acknowledged that the tokenization of T-bills could enhance operational efficiencies and spur innovation in the Treasury market, while also acknowledging potential risks to financial stability. One member emphasized that for tokenization to occur in the Treasury market, there would likely need to be a privately controlled permissioned blockchain overseen by a reliable government entity.
Stablecoins, which are digital tokens tied to the value of the US dollar, are becoming integral to trading and payment systems. As of 2024, the total market capitalization of stablecoins has reached unprecedented levels, nearing $180 billion according to CoinMarketCap.
Tether (USDT) leads the stablecoin market with a capitalization of $120 billion, while Circle’s USD Coin (USDC) follows as a distant second with approximately $35 billion in market cap, as reported by CoinMarketCap.
Additionally, the market for tokenized real-world assets (RWAs)—ranging from Treasury securities to fine art—presents a staggering $30 trillion opportunity globally, as highlighted by Colin Butler, Polygon’s global head of institutional capital, in an interview with Cointelegraph in August. There is a significant surge in demand for products that tokenize T-bills and other liquid, yield-generating assets.
Among the notable funds in terms of assets under management (AUM) are the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and the Franklin OnChain US Government Money Fund (FOBXX), which have AUM figures of approximately $530 million and $410 million, respectively.