Tokenized Treasury Funds Reach $14.69 Billion as Liquidity Faces Test
RWA Signal Insight
U.S. TreasuriesThe tokenized U.S. Treasury market reached a distributed value of $14.69 billion across 117 assets and 86,753 holders as of October 16. Despite this growth, a significant gap remains regarding the actual liquidity and collateral utility of these assets, as current tallies do not account for pledged collateral or transfer restrictions. Many funds, such as BlackRock’s BUIDL, limit transfers to pre-approved investors, which complicates liquidation processes for lenders during defaults. Survey data from 203 market participants reveals that 70% face daily settlement or delivery issues, necessitating an average excess collateral buffer of 7%. While institutions like J.P. Morgan have successfully used tokenized assets for margin requirements at CME Group, operational barriers persist. Market participants remain optimistic, with 52% expecting to manage live tokenized collateral by the end of 2026. These findings highlight that on-chain transferability does not inherently guarantee immediate cash conversion or market liquidity, posing challenges for broader adoption in financial workflows.
Key points
- Tokenized U.S. Treasury funds reached $14.69 billion in distributed value across 117 assets.
- 70% of market participants report daily settlement or delivery problems with tokenized collateral.
- 52% of surveyed participants expect to manage live tokenized collateral by the end of 2026.
- J.P. Morgan successfully utilized tokenized assets for margin requirements at CME Group in July.
Background
Tokenized U.S. Treasury funds represent short-term government debt obligations issued on public or private blockchains. These products aim to provide investors with yield-bearing assets that offer near-instant settlement and 24/7 transferability compared to traditional financial systems. They are increasingly being tested as collateral for margin calls and repo market activities.