For 2 years, decentralized finance operated on the idea that purely crypto-native belongings may function the financial base for a parallel monetary system.
Ethereum staked by way of Lido anchored billions in DeFi loans, wrapped Bitcoin backed perpetual swaps, and algorithmic stablecoins recycled protocol emissions into artificial {dollars}.
Your entire edifice assumed crypto may bootstrap its personal collateral hierarchy with out touching the $27 trillion US Treasury market.
That assumption has damaged quietly over the previous 18 months. Tokenized US Treasuries and money-market funds now sit at roughly $9 billion throughout 60 distinct merchandise and over 57,000 holder addresses, with a mean seven-day yield close to 3.8%. The expansion within the interval was greater than 5 occasions.
Zoom out to all the real-world asset stack and tokenized RWAs on public chains method $19 billion, with authorities securities and earnings merchandise dominating, in keeping with rwa.xyz knowledge.
Treasuries have change into the backbone of this stack, functionally replicating their position within the $5 trillion US repo market, the instrument towards which all the pieces else clears.
This isn’t boutique experimentation. BlackRock’s BUIDL fund reached almost $3 billion in dimension, was accepted as collateral on Binance, and was prolonged to BNB Chain.
Franklin Templeton’s BENJI token represents over $800 million in a US-registered authorities money-market fund, with its shareholder data maintained on seven totally different networks.
Circle’s USYC quietly surpassed $1.3 billion in July, fueled by a partnership with Binance that enabled institutional buyers to make use of the token as collateral for derivatives buying and selling.
JPMorgan launched a $100 million tokenized money-market fund on Ethereum that permits certified buyers to subscribe and redeem in USDC. The plumbing connecting Wall Road custody to Ethereum rails is in manufacturing, not proof-of-concept.
Wall Road custody meets Ethereum settlement
The issuer panorama reveals two competing theories of how crypto collateral evolves.
BlackRock’s BUIDL operates as a tokenized institutional liquidity fund managed by Securitize, with Financial institution of New York Mellon dealing with custody and fund administration. Shares represented by BUIDL tokens spend money on money, US Treasuries, and repos.
Redemptions are made in USDC, with a $250,000 minimal and no redemption charge, inserting BUIDL squarely within the institutional lane. Its acceptance as collateral on centralized exchanges and extension to a number of chains positions it as high-grade, dollar-denominated collateral for crypto derivatives and foundation trades.
Franklin Templeton took a unique path with its OnChain US Authorities Cash Fund, which tokenizes the shareholder registry itself: one share equals one BENJI token, with switch and record-keeping maintained on-chain moderately than in a legacy transfer-agent database.
The fund stays a registered US authorities money-market fund, the innovation sits in the place the ledger lives.
This method bets that public blockchains can function a major report for regulated securities, not simply as a secondary token layer on prime of conventional techniques.
Janus Henderson’s Anemoy Treasury Fund and Ondo Finance’s OUSG sit at reverse ends of a 3rd axis. Anemoy deploys tokens throughout Ethereum, Base, Arbitrum, and Celo, emphasizing multichain resilience, and has earned an S&P ranking targeted on its tokenization structure.
Ondo, in contrast, operates as a DeFi-native issuer partnering with institutional back-ends. Its OUSG product gives 24/7 minting and redemption in USDC or PayPal’s PYUSD, concentrating on certified buyers who need Treasury publicity with out leaving crypto-native rails.
Ondo’s broader platform reached $1.4 billion in whole worth locked by mid-2025, with roughly half tied to tokenized Treasury merchandise, and has since expanded multichain.
Smaller issuers fill the composability tail. Matrixdock’s STBT rebases curiosity each day and maintains a one-to-one peg with the greenback, backed by T-bills maturing inside six months and reverse repos.
OpenEden’s TBILL token earned a Moody’s “A” ranking and can be utilized as collateral in DeFi protocols.
On Solana, almost $530 million of the $792 million in tokenized real-world belongings are US Treasuries, with Ondo’s USDY commanding roughly $175 million and behaving like an interest-bearing stablecoin inside Solana DeFi functions.
Redemption mechanics constrain composability
Mechanically, most tokenized Treasury merchandise observe the identical backbone. A regulated fund or special-purpose automobile holds short-dated US authorities securities and repos with a standard custodian, equivalent to BNY Mellon.
A switch agent or tokenization platform mints ERC-20 or equal tokens representing fund shares, recorded on Ethereum or different layer-one blockchains.
Franklin’s BENJI maintains the shareholder report on-chain. In the meantime, BUIDL and OpenEden’s TBILL hold securities custody and fund administration firmly inside conventional belief buildings, whereas issuing tokens representing financial claims.
Ondo’s OUSG gives on the spot 24/7 minting and redemptions in USDC or PYUSD, with the variety of tokens multiplied by web asset worth figuring out what an investor receives.
These usually are not tokenized CUSIPs that anybody can burn for a T-bill on the Federal Reserve. They’re tokenized fund shares with particular redemption home windows, minimal sizes, and know-your-customer necessities, even when the tokens themselves dwell on public blockchains.
That distinction limits composability. Many of those tokens exist in allow-listed good contracts, and solely KYC’d wallets can maintain or transfer them. Some have minimal redemption sizes within the six-figure vary, and full composability is usually restricted to “KYC-DeFi” venues moderately than public permissionless swimming pools.
But inside these constraints, composability is advancing on two layers. On the institutional layer, tokenized Treasury funds operate as margin collateral.
The Monetary Instances reported that tokenized Treasury and money-market funds are more and more used as collateral for over-the-counter derivatives, permitting sellers to maneuver collateral 24/7 moderately than being tied to financial institution working hours.
USYC’s development is one other signal, because it has grown almost six occasions since Circle and Binance partnered.
On the DeFi layer, integration is extra fragmented however actual. OpenEden’s TBILL tokens may be posted as collateral in DeFi lending protocols equivalent to River, with secondary liquidity on decentralized exchanges and RWA marketplaces.
Matrixdock’s STBT integrates with RWA yield platforms, providing roughly 5% APY on short-term Treasuries, with on the spot minting and redemption coordinated with stablecoins like Ripple’s RLUSD.
MakerDAO held roughly $900 million in RWA collateral, a lot of it US Treasuries, by mid-2025, with plans to boost that share beneath the Sky Protocol rebrand.
Frax’s sFRAX vault straight purchases US Treasuries by way of a companion financial institution and passes by way of a yield monitoring the in a single day repo charge. Tens of hundreds of thousands of sFRAX staked, yielding close to 5%.
Protocols like Pendle deal with yield-bearing collateral, together with RWA-backed stablecoins and sDAI, as inputs into an on-chain interest-rate curve by splitting principal and yield into separate tokens.
As tokenized T-bills and Treasury-backed stablecoins proliferate, Pendle and comparable markets change into the price-discovery layer for short-end charges in DeFi.
On Solana, greater than 50% of tokenized RWAs are US Treasuries, with Ondo’s USDY and OUSG among the many largest positions, in keeping with DefiLlama knowledge.
Ethereum features because the regulatory backbone, with BUIDL, BENJI, and Anemoy, whereas Solana operates as a high-throughput rail the place Treasury-backed tokens behave virtually like interest-bearing stablecoins in DeFi functions.
Regulatory friction and systemic threat
The regulatory structure sits throughout three questions: who can maintain these tokens, the place they’re registered, and the way they intersect with stablecoin guidelines.
Most giant issuers function as money-market funds or skilled funds beneath current securities regulation. BENJI/FOBXX is a US-registered authorities money-market fund.
OpenEden’s TBILL Fund is a British Virgin Islands-regulated skilled fund overseen by the BVI Monetary Providers Fee. Janus Henderson’s Anemoy earned an S&P ranking targeted on its tokenization setup and controls.
Regulatory frameworks such because the EU’s Markets in Crypto-Belongings and, within the US, proposed stablecoin laws explicitly reference tokenized Treasuries and money-market funds, offering readability for issuers on wrapping authorities debt in tokens.
Nevertheless, most of this composability stays permissioned. KYC-DeFi venues, not public permissionless swimming pools, host the vast majority of integration.
In the case of systemic threat, convergence with stablecoins issues most. Again in mid-2024, Circle held roughly $28.1 billion in short-dated US Treasuries and in a single day reverse repos for USDC reserves, out of a complete of $28.6 billion in reserves.
Even earlier than Treasuries turned well-liked on-chain as freely movable tokens, they had been already the unseen collateral behind systemically essential stablecoins.
Tokenization makes the collateral itself transportable, pledgeable, and, in some instances, composable as DeFi cash.
Briefly, stablecoins already monetized Treasuries as reserve belongings. Tokenized Treasury funds now convey that collateral on-chain, the place it may be rehypothecated, margined, and composed into charge curves and structured merchandise.
Yield cycle or structural shift
Two forces clarify the expansion trajectory. On the cyclical facet, the 2023 to 2025 charge atmosphere offered an apparent tailwind.
Entrance-end US yields vary from 4% to five%, making tokenized T-bills a transparent improve over zero-yield stablecoins, particularly for market-making corporations and decentralized autonomous organizations that have to park idle money on-chain.
Issuance climbed from roughly $1.3 billion in early 2024 to $9 billion as of Dec. 15, carefully monitoring the rise in front-end charges.
On the structural facet, a number of knowledge factors argue this extends past a commerce on the speed cycle. Complete tokenized RWAs on public chains crossed $18.5 billion, with authorities debt because the anchor.
Tokenized Treasury funds have change into accepted collateral for crypto derivatives and centralized alternate margin, and establishments like JPMorgan are launching tokenized money-market funds on Ethereum explicitly to reap the benefits of 24/7 settlement and stablecoin rails.
DeFi’s financial base has quietly shifted from pure crypto to a mix of stablecoins and RWA-backed devices. Maker, Frax, and others more and more depend on Treasuries and repos as collateral.
Pendle and comparable protocols construct on-chain charge curves that reference these devices.
Solana’s RWA panorama is dominated by Treasury-backed tokens that behave like yield-bearing stablecoins inside DeFi functions.
Tokenized Treasuries are evolving into crypto’s repo market: a base layer of dollar-denominated, state-backed collateral that all the pieces else, perpetual swaps, foundation trades, stablecoin issuance, and prediction market margin, will more and more clear towards.
Whether or not as we speak’s $9 billion turns into $80 billion relies on regulation and charges, however the plumbing is in manufacturing on Ethereum and Solana. The query is not whether or not TradFi collateral migrates on-chain, however how briskly DeFi protocols rewire round it.
