For two years, decentralized finance operated on the concept that purely crypto-native assets could serve as the monetary base for a parallel financial system.
Ethereum staked through Lido anchored billions in DeFi loans, wrapped Bitcoin backed perpetual swaps, and algorithmic stablecoins recycled protocol emissions into synthetic dollars.
The entire edifice assumed crypto could bootstrap its own collateral hierarchy without touching the $27 trillion US Treasury market.
That assumption has broken quietly over the past 18 months. Tokenized US Treasuries and money-market funds now sit at roughly $9 billion across 60 distinct products and over 57,000 holder addresses, with an average seven-day yield near 3.8%. The growth in the period was more than five times.
Zoom out to the entire real-world asset stack and tokenized RWAs on public chains approach $19 billion, with government securities and income products dominating, according to rwa.xyz data.
Treasuries have become the spine of this stack, functionally replicating their role in the $5 trillion US repo market, the instrument against which everything else clears.
This is not boutique experimentation. BlackRock’s BUIDL fund reached nearly $3 billion in size, was accepted as collateral on Binance, and was extended to BNB Chain.
Franklin Templeton’s BENJI token represents over $800 million in a US-registered government money-market fund, with its shareholder records maintained on seven different networks.
Circle’s USYC quietly surpassed $1.3 billion in July, fueled by a partnership with Binance that enabled institutional investors to use the token as collateral for derivatives trading.
JPMorgan launched a $100 million tokenized money-market fund on Ethereum that allows qualified investors to subscribe and redeem in USDC. The plumbing connecting Wall Street custody to Ethereum rails is in production, not proof-of-concept.
Wall Street custody meets Ethereum settlement
The issuer landscape reveals two competing theories of how crypto collateral evolves.
BlackRock’s BUIDL operates as a tokenized institutional liquidity fund managed by Securitize, with Bank of New York Mellon handling custody and fund administration. Shares represented by BUIDL tokens invest in cash, US Treasuries, and repos.
Redemptions are made in USDC, with a $250,000 minimum and no redemption fee, placing BUIDL squarely in the institutional lane. Its acceptance as collateral on centralized exchanges and extension to multiple chains positions it as high-grade, dollar-denominated collateral for crypto derivatives and basis trades.
Franklin Templeton took a different path with its OnChain US Government Money Fund, which tokenizes the shareholder registry itself: one share equals one BENJI token, with transfer and record-keeping maintained on-chain rather than in a legacy transfer-agent database.
The fund remains a registered US government money-market fund, the innovation sits in where the ledger lives.
This approach bets that public blockchains can serve as a primary record for regulated securities, not just as a secondary token layer on top of traditional systems.
Janus Henderson’s Anemoy Treasury Fund and Ondo Finance’s OUSG sit at opposite ends of a third axis. Anemoy deploys tokens across Ethereum, Base, Arbitrum, and Celo, emphasizing multichain resilience, and has earned an S&P rating focused on its tokenization architecture.
Ondo, by contrast, operates as a DeFi-native issuer partnering with institutional back-ends. Its OUSG product offers 24/7 minting and redemption in USDC or PayPal’s PYUSD, targeting qualified investors who want Treasury exposure without leaving crypto-native rails.
Ondo’s broader platform reached $1.4 billion in total value locked by mid-2025, with roughly half tied to tokenized Treasury products, and has since expanded multichain.
Smaller issuers fill the composability tail. Matrixdock’s STBT rebases interest daily and maintains a one-to-one peg with the dollar, backed by T-bills maturing within six months and reverse repos.
OpenEden’s TBILL token earned a Moody’s “A” rating and can be used as collateral in DeFi protocols.
On Solana, nearly $530 million of the $792 million in tokenized real-world assets are US Treasuries, with Ondo’s USDY commanding roughly $175 million and behaving like an interest-bearing stablecoin inside Solana DeFi applications.
Redemption mechanics constrain composability
Mechanically, most tokenized Treasury products follow the same spine. A regulated fund or special-purpose vehicle holds short-dated US government securities and repos with a traditional custodian, such as BNY Mellon.
A transfer agent or tokenization platform mints ERC-20 or equivalent tokens representing fund shares, recorded on Ethereum or other layer-one blockchains.
Franklin’s BENJI maintains the shareholder record on-chain. Meanwhile, BUIDL and OpenEden’s TBILL keep securities custody and fund administration firmly within traditional trust structures, while issuing tokens representing economic claims.
Ondo’s OUSG offers instant 24/7 minting and redemptions in USDC or PYUSD, with the number of tokens multiplied by net asset value determining what an investor receives.
These are not tokenized CUSIPs that anyone can burn for a T-bill at the Federal Reserve. They are tokenized fund shares with specific redemption windows, minimum sizes, and know-your-customer requirements, even if the tokens themselves live on public blockchains.
That distinction limits composability. Many of these tokens exist in allow-listed smart contracts, and only KYC’d wallets can hold or move them. Some have minimum redemption sizes in the six-figure range, and full composability is often restricted to “KYC-DeFi” venues rather than public permissionless pools.
Yet within those constraints, composability is advancing on two layers. At the institutional layer, tokenized Treasury funds function as margin collateral.
The Financial Times reported that tokenized Treasury and money-market funds are increasingly used as collateral for over-the-counter derivatives, allowing dealers to move collateral 24/7 rather than being tied to bank operating hours.
USYC’s growth is another sign, as it has grown nearly six times since Circle and Binance partnered.
At the DeFi layer, integration is more fragmented but real. OpenEden’s TBILL tokens can be posted as collateral in DeFi lending protocols such as River, with secondary liquidity on decentralized exchanges and RWA marketplaces.
Matrixdock’s STBT integrates with RWA yield platforms, offering roughly 5% APY on short-term Treasuries, with instant minting and redemption coordinated with stablecoins like Ripple’s RLUSD.
MakerDAO held approximately $900 million in RWA collateral, much of it US Treasuries, by mid-2025, with plans to raise that share under the Sky Protocol rebrand.
Frax’s sFRAX vault directly purchases US Treasuries via a partner bank and passes through a yield tracking the overnight repo rate. Tens of millions of sFRAX staked, yielding near 5%.
Protocols like Pendle treat yield-bearing collateral, including 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 similar markets become the price-discovery layer for short-end rates in DeFi.
On Solana, more than 50% of tokenized RWAs are US Treasuries, with Ondo’s USDY and OUSG among the largest positions, according to DefiLlama data.
Ethereum functions as the regulatory spine, with BUIDL, BENJI, and Anemoy, while Solana operates as a high-throughput rail where Treasury-backed tokens behave almost like interest-bearing stablecoins in DeFi applications.
Regulatory friction and systemic risk
The regulatory architecture sits across three questions: who can hold these tokens, where they are registered, and how they intersect with stablecoin rules.
Most large issuers operate as money-market funds or professional funds under existing securities law. BENJI/FOBXX is a US-registered government money-market fund.
OpenEden’s TBILL Fund is a British Virgin Islands-regulated professional fund overseen by the BVI Financial Services Commission. Janus Henderson’s Anemoy earned an S&P rating focused on its tokenization setup and controls.
Regulatory frameworks such as the EU’s Markets in Crypto-Assets and, in the US, proposed stablecoin legislation explicitly reference tokenized Treasuries and money-market funds, providing clarity for issuers on wrapping government debt in tokens.
However, most of this composability remains permissioned. KYC-DeFi venues, not public permissionless pools, host the majority of integration.
When it comes to systemic risk, convergence with stablecoins matters most. Back in mid-2024, Circle held roughly $28.1 billion in short-dated US Treasuries and overnight reverse repos for USDC reserves, out of a total of $28.6 billion in reserves.
Even before Treasuries became popular on-chain as freely movable tokens, they were already the unseen collateral behind systemically important stablecoins.
Tokenization makes the collateral itself portable, pledgeable, and, in some cases, composable as DeFi money.
In short, stablecoins already monetized Treasuries as reserve assets. Tokenized Treasury funds now bring that collateral on-chain, where it can be rehypothecated, margined, and composed into rate curves and structured products.
Yield cycle or structural shift
Two forces explain the growth trajectory. On the cyclical side, the 2023 to 2025 rate environment provided an obvious tailwind.
Front-end US yields range from 4% to 5%, making tokenized T-bills a clear upgrade over zero-yield stablecoins, especially for market-making firms and decentralized autonomous organizations that need to park idle cash on-chain.
Issuance climbed from roughly $1.3 billion in early 2024 to $9 billion as of Dec. 15, closely tracking the rise in front-end rates.
On the structural side, several data points argue this extends beyond a trade on the rate cycle. Total tokenized RWAs on public chains crossed $18.5 billion, with government debt as the anchor.
Tokenized Treasury funds have become accepted collateral for crypto derivatives and centralized exchange margin, and institutions like JPMorgan are launching tokenized money-market funds on Ethereum explicitly to take advantage of 24/7 settlement and stablecoin rails.
DeFi’s monetary base has quietly shifted from pure crypto to a blend of stablecoins and RWA-backed instruments. Maker, Frax, and others increasingly rely on Treasuries and repos as collateral.
Pendle and similar protocols build on-chain rate curves that reference those instruments.
Solana’s RWA landscape is dominated by Treasury-backed tokens that behave like yield-bearing stablecoins inside DeFi applications.
Tokenized Treasuries are evolving into crypto’s repo market: a base layer of dollar-denominated, state-backed collateral that everything else, perpetual swaps, basis trades, stablecoin issuance, and prediction market margin, will increasingly clear against.
Whether today’s $9 billion becomes $80 billion depends on regulation and rates, but the plumbing is in production on Ethereum and Solana. The question is no longer whether TradFi collateral migrates on-chain, but how fast DeFi protocols rewire around it.
