Tokenized United States Treasury assets on public blockchains have exceeded $1 billion, with traditional financial institutions increasingly moving their securities on-chain amidst a period of heightened interest rates. According to data from 21.co and Dune Analytics, as of March 28, the value of tokenized government securities reached $1.07 billion across 17 different products. The majority of these assets are built on the Ethereum, Polygon, and Stellar networks.
Leading the pack in terms of issuers is Franklin Templeton, a prominent investment firm, with assets totaling over $360.1 million and capturing 33.6% of the market share through its Franklin OnChain U.S. Government Money Fund (FOBXX). Utilizing the Polygon and Stellar blockchains, this tokenized fund, represented by the BENJI token, was introduced in 2021.
Following closely behind is BlackRock’s USD Institutional Digital Liquidity Fund, known as BUILD, with $244.8 million worth of assets tokenized, accounting for 22.8% of government Treasurys on-chain.
Government treasuries, which are debt securities issued by the U.S. federal government, have seen a surge in interest from investors due to rising interest rates in the United States. This has made U.S. Treasury securities more appealing from a risk-return perspective. As of March, the U.S. Federal Reserve has kept its benchmark interest rates at a 23-year high, ranging between 5.25% and 5.50%, in an effort to manage inflation. The value of blockchain-based digital tokens representing U.S. Treasury securities skyrocketed by 641% in 2023.
Tokenizing U.S. Treasurys on a blockchain involves creating digital tokens that represent ownership of the underlying security. This process has revolutionized how securities are issued, traded, and managed, providing increased liquidity and accessibility to investors with limited capital. Major financial institutions such as UBS and JPMorgan have delved into asset tokenization, launching projects that aim to connect traditional financial assets with blockchain technology.
Even cryptocurrency projects have embraced tokenized U.S. Treasurys to support their operations. Ondo Finance, a decentralized finance platform, now holds the largest share of BlackRock’s BUILD, owning 38% of the fund’s supply, according to Tom Wan, a data analyst at 21.co.
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