Tokenized Treasuries Are An Emerging Asset Class, But RWA Adoption May Take Time
Demand for tokenized treasuries is on the rise. Recent data indicates that more than $1 billion in treasury notes has been tokenized on public blockchain networks.
Andrew O’Neill, Digital Assets Managing Director of S&P Global Ratings, told Cryptonews that the recent launch of BlackRock’s BUIDL fund – currently the world’s largest tokenized treasury fund – seems to be accelerating this trend.
“As shown in the chart, the launch of the BUIDL fund has steepened growth in outstanding volume,” said O’Neill.
“It’s also interesting to note Larry Fink’s public statements on the role of tokenization in the future of BlackRock and financial markets, to understand the context in which this is being done,” O’Neill added.
Indeed, BlackRock CEO Larry Fink recently mentioned that capital markets could be made more efficient by moving on-chain.
“Tokenized treasuries are digital tokens created on a blockchain that are backed by a portfolio of U.S. government obligations,” O’Neill explained. “These assets are issued both by blockchain-native firms and traditional institutions.”
O’Neill believes that tokenized treasuries are becoming more important because they can help money market funds and their investors manage liquidity.
Tokenized U.S. Treasuries just topped $1B
$26.99T to go pic.twitter.com/PDF0uqksj3
— Camila Russo (@CamiRusso) April 5, 2024
For example, O’Neill noted that in times of market volatility, investors may need to meet margin calls on some positions.
“Money market fund investors may seek to redeem their shares in the fund for cash to meet these obligations,” said O’Neill.
O’Neill noted that if many investors redeemed at once, however, this would increase the fund’s liquidity risk.
While the U.S. Securities and Exchange Commission
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