Digital Assets Evolve: Tokenized US Treasuries Outpace Stablecoins for Yield & Stability

The digital asset landscape is experiencing a profound shift as market participants progressively reallocate capital from stablecoins toward tokenized U.S. Treasury products. This strategic pivot, primarily motivated by the pursuit of yield and enhanced stability, underscores a maturing ecosystem’s demand for more resilient financial instruments. Billions of dollars are now flowing into these tokenized assets, establishing them as a compelling alternative to non-yielding stablecoins and a potent tool for collateral within derivatives markets.

• Capital is shifting from stablecoins to tokenized U.S. Treasury products.
• This shift is primarily driven by demand for yield and enhanced stability in digital asset markets.
• Total assets in tokenized U.S. Treasuries have surged 80% year-to-date, reaching $7.4 billion.
• Funds managed by BlackRock, Franklin Templeton, and Janus Henderson have collectively tripled.
• Industry leaders view tokenized funds as a more robust, long-term solution compared to stablecoins.

This burgeoning trend is substantiated by rapid growth metrics. Total assets under management in tokenized U.S. Treasury products have surged by an impressive 80% year-to-date, reaching $7.4 billion, as reported by RWA.xyz. Notably, the collective assets held within funds managed by prominent institutions such as BlackRock, Franklin Templeton, and Janus Henderson have tripled during this period. Olivier Portensen, CEO of FundsDLT, characterizes this as a fundamental paradigm shift, suggesting that stablecoins represent a provisional solution, while tokenized funds are emerging as “the real deal” that sophisticated traders are increasingly adopting.

Enhanced Efficiency and Market Potential

Tokenized money market funds present an attractive proposition, offering competitive yields and inherent stability, which makes them highly appealing for both capital preservation strategies and use as collateral in derivative transactions. Beyond mere yield, the process of tokenization introduces transformative operational efficiencies. These include near-instantaneous settlement times, often reduced from days to mere minutes, significantly lowered capital costs, mitigated operational risks, and vastly enhanced transparency in asset accounting. McKinsey & Company projects that the aggregate market for tokenized funds could eventually expand to an estimated $2 trillion, highlighting its substantial long-term potential.

The widespread adoption by institutional players is pivotal to this evolution. Crypto traders and stablecoin issuers, exemplified by Sky Money—a significant issuer and client of Janus Henderson’s JTRSY fund, which boasts $400 million in assets under management—are actively seeking more profitable and secure backing for their operations. Concurrently, traditional financial institutions are increasingly investigating the utility of tokenized treasury bonds for over-the-counter (OTC) derivative collateral. This accelerating shift is further reinforced by substantial infrastructure investments, including a $135 million commitment from leading firms such as DRW Trading, Tradeweb, BNP Paribas, Citadel, and Goldman Sachs into Digital Asset, a prominent blockchain infrastructure developer. Yuval Ruze, CEO of Digital Asset, anticipates “dramatic” cost savings stemming from the enhanced speed and efficiency of collateral movement facilitated by these advancements.

Navigating Regulatory and Market Maturation

The stated support for the crypto industry from President Donald Trump is anticipated to expedite the modernization of financial infrastructure through blockchain technology, thereby cultivating a more permissive environment for digital asset innovation. Nevertheless, significant challenges remain. Experts such as Tony Ashraf, a Managing Director at BlackRock, point to inherent limitations for tokenized bonds, including reduced liquidity during weekend hours and restricted acceptance by established clearing centers. Despite the profound transformative potential of tokenized collateral, Caroline Fem, Head of the CFTC, posits that its “killer application” is currently operating within a market that is “not yet mature,” underscoring the critical need for ongoing infrastructure development and broader institutional familiarity and comfort with these nascent instruments.