US Treasurys Tokenization Surpasses $1B on Public Blockchains

The total value of United States Treasurys tokenized on public blockchains has exceeded $1 billion. This is due to traditional financial firms digitizing their securities on the blockchain, a trend that has continued amidst high interest rates. According to data from 21.co and Dune Analytics, there are 17 different tokenized government securities with a combined value of $1.07 billion as of March 28. The majority of these assets are based on the Ethereum, Polygon, and Stellar networks.

Leading the pack is investment firm Franklin Templeton, with over $360.1 million in assets and a 33.6% market share through its Franklin OnChain U.S. Government Money Fund (FOBXX). This tokenized fund, represented by the BENJI token, was launched in 2021 and utilizes the Polygon and Stellar blockchains. In second place is BlackRock’s USD Institutional Digital Liquidity Fund (BUILD) with $244.8 million worth of assets tokenized, representing 22.8% of government Treasurys on the blockchain.

For those unfamiliar, Treasurys are debt securities issued by the U.S. federal government. Investors purchase these securities to lend money to the government, and in return, the government promises to repay the principal amount along with interest on a specified date. With the recent increase in interest rates in the United States, government treasuries have become a more appealing investment option for investors, considering the risk-return perspective.

In an effort to control inflation, the U.S. Federal Reserve has kept its benchmark interest rates at a 23-year high, ranging between 5.25% and 5.50%. As a result, tokenized U.S. Treasury securities on the blockchain have seen a staggering 641% increase in 2023.

Tokenizing U.S. Treasurys on the blockchain involves creating digital tokens that represent ownership of the underlying security. This process revolutionizes the way securities are issued, traded, and managed, offering increased liquidity and enabling investors with limited capital to participate.

Major financial institutions like UBS and JPMorgan have ventured into asset tokenization projects, aiming to bridge the gap between traditional financial assets and blockchain technology. Even crypto projects are getting involved, utilizing tokenized U.S. Treasurys to support their operations. For instance, decentralized finance platform Ondo Finance currently holds 38% of BlackRock’s BUILD, making it the largest holder of the fund’s supply.

The digitization of U.S. Treasurys on the blockchain has surpassed $1 billion, with traditional financial firms leading the charge. This trend is driven by elevated interest rates and the numerous benefits that come with tokenization, such as increased liquidity and accessibility for investors. Major financial institutions and crypto projects alike are embracing this technology, further propelling the tokenization of government securities.