Tokenized Treasury Funds Pass $2B Market Cap Amid BlackRock’s Explosive Growth

As a seasoned researcher with a knack for deciphering market trends and a soft spot for blockchain technology, I must admit that the rapid growth of tokenized Treasury notes has piqued my interest. Having closely followed the digital assets landscape since its inception, I have witnessed numerous milestones and transformations. However, the doubling of market cap within five months is an unprecedented feat, even by today’s fast-paced cryptocurrency standards.

In just under five months following their achievement of a $1 billion market cap, tokenized U.S. Treasury bonds have more than doubled once more, surpassing the $2 billion mark on Saturday, as indicated by information from RWA.xyz.

Digitized U.S. government bonds, known as Tokenized Treasuries, are tradable units on blockchain networks like Ethereum, Stellar, Solana, Mantle and others. The fact that these recently launched funds have reached a $2 billion milestone is impressive, but considering the U.S. Treasury market’s whopping $27 trillion size, there’s immense potential for growth.

This year, the US Dollar Institutional Digital Liquidity Fund (BUIDL) by BlackRock, the largest among its kind, has significantly contributed to the market’s impressive surge. Just six weeks after its launch in late March, BUIDL reached a market cap of $375 million, and today it stands at $503 million. Other players in this growing field include Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX) and Ondo’s U.S. Dollar Yield (USDY), both of which have also experienced rapid expansion.

The majority of recent growth has been observed in smaller entities according to rwa.xyz data. Hashnote’s offering expanded approximately 50% to reach an impressive $218 million over the past month. Meanwhile, OpenEden and Superstate saw their products grow by 37% and 18%, respectively, during the same period, with both nearing a market capitalization of $100 million.

Investors interested in cryptocurrency are increasingly choosing tokenized Treasury funds as a means to expand their portfolio and capitalize on the significant increase in Treasury bond yields during recent years, all while enjoying the flexibility of executing transactions whenever desired.

10-year U.S. interest rates are now at 3.81%, which is significantly higher than the 1.5% they were four years ago. Additionally, the 2-year yield has climbed to 3.92%, a substantial increase from nearly zero percent in both 2020 and 2021.