Tokenized Treasuries: The New Foundation for DeFi's Growth?
For two years, decentralized finance (DeFi) operated on the premise that crypto-native assets could serve as the monetary base for a parallel financial system. Billions were anchored in DeFi loans through Ethereum staking via Lido, wrapped Bitcoin backed perpetual swaps flourished, and algorithmic stablecoins recycled protocol emissions into synthetic dollars. This entire ecosystem assumed crypto could bootstrap its own collateral hierarchy, remaining largely independent of the $27 trillion US Treasury market. That assumption has quietly begun to unravel over the past 18 months. A significant shift is underway, with tokenized US Treasuries and money-market funds now representing roughly $9 billion across 60 distinct products and over 57,000 holder addresses, boasting an average seven-day yield near 3.8%. This represents a growth rate exceeding five times the previous period.
The Rise of Real-World Assets (RWAs) in DeFi
Zooming out to encompass the entire real-world asset (RWA) stack, 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 isn’t merely experimental; it’s a burgeoning trend attracting significant institutional interest.
BlackRock's BUIDL fund has reached nearly $3 billion in size, gaining acceptance as collateral on Binance and extending to BNB Chain. Franklin Templeton's BENJI token represents over $800 million in a US-registered government money-market fund, with 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, allowing qualified investors to subscribe and redeem in USDC. The infrastructure connecting Wall Street custody to Ethereum rails is now in production, not just a proof-of-concept.
Tokenized US Treasury products have experienced substantial growth, increasing from under $2 billion in mid-2024 to nearly $10 billion by late 2025 across multiple issuers. This demonstrates a clear and accelerating demand for bringing traditional finance onto the blockchain.
Wall Street Meets Ethereum: Two Competing Models
The issuer landscape reveals two primary theories regarding the evolution of crypto collateral. 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, firmly positioning BUIDL within the institutional space. Its acceptance as collateral on centralized exchanges and expansion to multiple chains establish it as high-grade, dollar-denominated collateral for crypto derivatives and basis trades.
Franklin Templeton has taken a different approach 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 lies in where the ledger resides. This strategy 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.
Diverse Approaches to Tokenization
Janus Henderson's Anemoy Treasury Fund and Ondo Finance's OUSG represent 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, conversely, 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 seeking 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 are filling the composability gap. 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 and Composability Constraints
Mechanically, most tokenized Treasury products follow a similar structure. 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 (KYC) requirements, even if the tokens themselves live on public blockchains.
This 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. However, within these constraints, composability is advancing on two layers.
Institutional and DeFi Layer Composability
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 (OTC) derivatives, allowing dealers to move collateral 24/7 rather than being tied to bank operating hours. USYC's growth is another indicator, having grown nearly six times since Circle and Binance partnered.
Circle's USYC tokenized money-market fund grew from roughly $250 million in July 2025 to approximately $1.3 billion by December across multiple blockchains.
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 are 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 Landscape and Systemic Risk
The regulatory architecture revolves around three key 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 (MiCA) 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 is paramount. 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. Cyclically, the 2023 to 2025 rate environment provided a clear tailwind. Front-end US yields ranging from 4% to 5% make tokenized T-bills a clear upgrade over zero-yield stablecoins, especially for market-making firms and decentralized autonomous organizations (DAOs) needing to park idle cash on-chain. Issuance climbed from roughly $1.3 billion in early 2024 to $9 billion as of December 15, closely tracking the rise in front-end rates.
Structurally, several data points suggest 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.