From ETH to T-Bills: How Tokenized US Treasuries Are Redefining DeFi Collateral

Introduction

Over just 18 months, tokenized US Treasuries and money-market funds have grown from about $2 billion to roughly $9 billion across 60 products and 57,000 addresses, offering average seven-day yields near 3.8%. As part of a broader $19 billion real-world asset (RWA) stack on public blockchains, these tokenized T-bills now function as the de facto base collateral layer—similar to their role in the $5 trillion U.S. repo market—directly challenging the idea that DeFi could bootstrap its own collateral hierarchy without touching traditional finance. DeFi now must form its own response and find a way to put themselves back as an efficient alternative to centralized avenues following these developments.

Major TradFi players are driving this shift. BlackRock’s BUIDL fund (nearly $3 billion), Franklin Templeton’s BENJI token (over $800 million), Circle’s USYC (around $1.3 billion), JPMorgan’s tokenized money-market fund on Ethereum, and platforms like Ondo (OUSG, USDY) and OpenEden (TBILL) all bring regulated Treasury exposure on-chain. These tokenized Treasuries are being used as margin collateral on Binance and other centralized venues, integrated into Ethereum and Solana DeFi protocols, and treated as interest-bearing stablecoin alternatives. While composability is constrained by KYC requirements, minimum redemption sizes, and allow-listed smart contracts, within those permissioned environments tokenized US Treasuries power lending, OTC derivatives, RWA yield platforms, and on-chain rate markets like Pendle, effectively turning them into DeFi’s new “risk-free” benchmark.

Regulation and macro rates shape whether this $9 billion market becomes $80 billion, but the structural plumbing is already live. Most products sit within existing securities regimes (e.g., U.S. government money-market funds, BVI professional funds) and are explicitly contemplated in frameworks like MiCA and proposed U.S. stablecoin rules. Critically, Treasuries were already the unseen backing for major stablecoins like USDC; tokenization simply makes that collateral itself portable, pledgeable, and rehypothecatable on-chain. DeFi’s monetary base has shifted from pure crypto collateral (ETH, stETH, wrapped BTC) to a blend of stablecoins and RWA-backed instruments, especially tokenized T-bills on Ethereum and Solana. That evolution introduces new systemic risks but also cements tokenized US Treasuries, RWA DeFi, and on-chain money-market funds as foundational to the next phase of crypto collateral, stablecoin design, and DeFi yield generation.

Background

Over the past few years, decentralized finance (DeFi) was built around a simple idea: crypto-native assets could serve as the monetary base for an alternative financial system. Ether staked on liquid staking protocols, wrapped Bitcoin, and governance tokens backing algorithmic stablecoins all played the role that government bonds and cash play in traditional finance.

That assumption is now breaking. A growing share of DeFi’s “risk‑free” collateral is no longer purely crypto-native. It’s tokenized US Treasuries and on-chain money‑market funds—real‑world assets (RWA) wrapped as tokens and plugged directly into DeFi and institutional trading infrastructure.

According to data from RWA.xyz, the tokenized US Treasuries market now sits around $9 billion, across roughly 60 products and nearly 60,000 holder addresses. CryptoSlate first highlighted this shift as a quiet but decisive change in DeFi’s foundation, with tokenized T‑bills growing more than fivefold in about 18 months from under $2 billion to nearly $10 billion. At the same time, the broader tokenized real‑world asset stack on public chains has crossed $18–21 billion in value, with US government debt as its backbone.

This article explains what’s actually happening under the hood, why tokenized Treasuries are gaining traction as DeFi collateral, and what it means for anyone building in DeFi or fintech.

What Are Tokenized US Treasuries and RWAs?

Before looking at market structure, it helps to be precise about terminology.

US Treasuries

US Treasuries are debt securities issued by the US government—widely treated as the benchmark “risk‑free” asset in traditional finance. Short‑dated T‑bills (e.g., 1–12 months) are especially important in money markets and the repo system as high‑quality, liquid collateral.

Tokenization

Tokenization in this context means representing an economic claim on a traditional asset—like a T‑bill or a share of a money‑market fund—as a blockchain token (often an ERC‑20). The underlying asset still sits in a traditional custody and legal structure; the token is a digital wrapper around the economic and legal claim.

Tokenization generally gives you:

• 24/7 transfer and settlement

• Programmability (smart contracts can use the asset as collateral, in AMMs, etc.)

• Easier integration across venues (CEX, DeFi, on‑chain treasuries, fintech apps)

Real‑World Assets (RWA)

Real‑world assets (RWAs) are off‑chain assets—Treasuries, corporate bonds, private credit, real estate, funds—that are represented and transacted on-chain. Tokenized US Treasuries are one of the most mature and straightforward categories of RWA:

• Clear legal structure

• Deep existing liquidity

• Well‑understood risk profile

• Natural fit for yield‑seeking on-chain capital

Today, RWAs on public chains are approaching $19–21 billion by total market cap, with government securities and income products as the dominant category, according to RWA.xyz.

The Numbers Behind the $9 Billion Shift

The top‑line numbers tell the story of a market that is both growing and consolidating.

• Total tokenized Treasuries: around $8.9–9.0 billion in value, 60+ products, ~58,000+ holders on public chains RWA.xyz

• Market concentration: six issuers account for ~88% of tokenized Treasury issuance, with BlackRock’s BUIDL alone representing roughly 40%+ of the sector’s assets, per Cointelegraph citing RWA.xyz data

• Growth trajectory: tokenized Treasuries climbed from around $1.3 billion in early 2024 to several billion by mid‑2025; by March 2025 they hit a record $4.2 billion before continuing to grow, often behaving as a “flight to quality” during market drawdowns CoinDesk

CryptoSlate reports that, on Ethereum and other L1s, tokenized US Treasuries and money‑market funds now sit near $9 billion, spanning around 60 products, with average seven‑day yields around 3–4% depending on the rate environment and product structure.

This is no longer an experimental niche. It’s a meaningful alternative to holding idle stablecoins or leaving cash off‑chain.

Who Are the Major Players in Tokenized Treasuries?

The current tokenized US Treasuries market is dominated by large asset managers and a small number of specialized RWA platforms. A few names matter a lot:

BlackRock – BUIDL

• Product: BlackRock USD Institutional Digital Liquidity Fund (BUIDL)

• Platform: Securitize (tokenization + investor onboarding)

• Scale: Around $1.7–2.5+ billion in market cap, depending on the point in time, making it the largest tokenized Treasury product

• Structure: Tokenized institutional liquidity fund investing in cash, US Treasuries, and repos; custody and administration by BNY Mellon

• Use cases: Accepted as collateral on major centralized exchanges and integrated into other tokenized products (e.g., Ondo’s OUSG holds BUIDL as a reserve asset)

BUIDL is squarely aimed at institutional investors, with high minimums (e.g., $250,000), KYC/AML requirements, and redemptions settled in USDC.

Franklin Templeton – BENJI

• Product: Franklin OnChain U.S. Government Money Fund (BENJI)

• Scale: ~$800 million in assets, according to CryptoSlate and RWA.xyz

• Innovation: Tokenizes the shareholder registry itself—1 share = 1 BENJI token. The primary record of ownership lives on public blockchains, not in a legacy transfer‑agent database.

• Regulatory status: US‑registered government money‑market fund

BENJI is an early proof that regulated securities can use public blockchains as their canonical ledger, not just as a secondary representation.

Circle – USYC

• Product: USYC, a tokenized short‑term US Treasury money‑market fund

• Scale: ~$1.4+ billion in value and growing fast

• Positioning: Targets non‑US investors; used as on‑chain collateral, including via a partnership with Binance that allows institutions to post USYC as margin

Circle is also the issuer of USDC, which is backed predominantly by short‑term Treasuries and overnight reverse repos. Even before tokenized Treasuries existed as tradable tokens, they were quietly sitting behind the largest dollar stablecoins.

Ondo – OUSG and USDY

• Products:

  • OUSG: tokenized short‑term US government bond fund

  • USDY: tokenized note backed by T‑bills and bank deposits, behaving like a yield‑bearing stablecoin

• Scale: Ondo’s broader platform has crossed $1+ billion in TVL, with a large share in Treasury‑backed products. In some periods, OUSG and USDY together have approached ~$1 billion in market cap (CoinDesk).

• Focus: DeFi‑native positioning with institutional back‑ends; 24/7 mint/redeem via USDC or PYUSD; multichain deployments (Ethereum, Solana, others)

Ondo is often the bridge between large institutional liquidity pools and DeFi protocols on chains like Ethereum and Solana.

Other Notable Issuers

• OpenEden (TBILL) – BVI‑regulated professional fund with T‑bill exposure and on‑chain collateral integrations

• Matrixdock (STBT) – rebasing token backed by short‑dated T‑bills, pegged 1:1 to the dollar and integrated with yield platforms

• Janus Henderson / Anemoy (JTRSY) – S&P‑rated tokenized Treasury fund spread across multiple chains with an emphasis on tokenization controls and architecture

Per RWA.xyz and Cointelegraph, six entities—BlackRock, Franklin Templeton, Ondo, Circle, Superstate, and others—control nearly 90% of the market. That concentration has both benefits (standardization, regulatory robustness) and risks (centralization of on‑chain “risk‑free” collateral).

How Tokenized US Treasuries Actually Work

Despite the diversity of brand names, most tokenized US Treasuries follow the same basic architecture.

1. Traditional fund or SPV holds the assets

• A regulated fund, trust, or special‑purpose vehicle (SPV) holds short‑term US Treasuries, repos, and cash equivalents.

• A traditional custodian (e.g., BNY Mellon, J.P. Morgan, Clear Street) safekeeps the securities.

2. Tokenization platform issues on‑chain shares

• A transfer agent or tokenization provider (e.g., Securitize, Libeara, Centrifuge) mints tokens that represent shares in the fund, not direct CUSIP‑level ownership.

• These tokens live on public blockchains such as Ethereum, Solana, Base, Celo, or ZK‑rollups.

3. KYC and eligibility constraints

• Most products are not fully permissionless. They restrict who can hold or transfer tokens:

  • US qualified purchasers / accredited investors

  • Non‑US investors only

  • Professional or institutional investors in particular jurisdictions

• This is enforced via allow‑listed smart contracts and on‑chain or off‑chain KYC checks.

4. Redemption mechanics and NAV

• Investors can subscribe or redeem via fiat or stablecoins (often USDC or PYUSD).

• The amount received is based on net asset value (NAV):

Payout=Token quantity×NAV per share\text{Payout} = \text{Token quantity} \times \text{NAV per share}Payout=Token quantity×NAV per share

• Some products offer instant or near‑instant on‑chain mint/redeem synced with NAV; others batch redemptions during specific windows and have high minimum sizes (e.g., $100k–$250k+).

5. Yield distribution

• Yield comes from the underlying T‑bills and repo instruments.

• It may accrue via:

  • Rebasing (token balances increase)

  • NAV appreciation (token price rises vs. $1)

  • Separate “yield tokens” when plugged into DeFi protocols like Pendle

A critical point: these are not tokenized individual Treasuries held at the Fed that you can redeem one‑for‑one yourself. They are tokenized fund shares, with all the legal and operational constraints that implies.

Composability, KYC-DeFi, and the Limits of “Money Legos”

One of DeFi’s core promises is composability—“money legos” that can snap together permissionlessly. Tokenized US Treasuries partially challenge that model.

Constraints on Composability

• Allow‑listed contracts: Many products only allow transfers between pre‑approved (KYC’d) wallets.

• Minimum investment and redemption sizes: Ranging from a few thousand dollars to six‑figure minimums.

• Regulatory segmentation: Some tokens are for US investors, some only for non‑US investors, some for institutions only.

As a result, a significant portion of tokenized T‑bill activity happens in what you could call “KYC‑DeFi” venues: permissioned lending platforms, institutional AMMs, and OTC‑style credit lines, rather than fully open, anonymous pools.

Where Composability Is Still Advancing

Despite those constraints, composability is evolving on two layers:

1. Institutional layer – margin and collateral infrastructure

• Tokenized Treasury funds are increasingly used as margin collateral for derivatives and prime brokerage relationships, as reported by the Financial Times and other outlets.

• Because they’re tokenized, this collateral can move 24/7 across venues and blockchains—far more flexible than traditional bank rails.

2. DeFi layer – RWA DeFi protocols and yield markets

• Protocols like MakerDAO, Frax, and others hold large RWA positions (including Treasuries) as backing for their stablecoins.

• Platforms like Pendle treat yield‑bearing RWA tokens and RWA‑backed stablecoins as inputs into on‑chain interest‑rate markets, splitting principal and yield into separate tokens to create forward yield curves.

• RWA‑specific DeFi platforms (e.g., River, RWA marketplaces, Solana RWA pools) are integrating tokens like TBILL, STBT, OUSG, and USDY as collateral, liquidity, or principal-bearing assets.

On Solana, for example, more than half of all tokenized RWAs are US Treasuries, with tokens like Ondo’s USDY and OUSG functioning as interest‑bearing stablecoin alternatives inside DeFi applications, according to DeFiLlama and CryptoSlate’s reporting.

On Ethereum, products like BUIDL, BENJI, and Anemoy effectively form the “regulatory spine” of tokenized US Treasuries, anchoring the legal and fund‑level layer even as liquidity and usage extend to faster L2s and sidechains.

Regulatory Architecture and Systemic Risk

Tokenized Treasuries sit at the intersection of securities regulation, payments, and stablecoin policy. Three questions dominate:

1. Who is allowed to hold the tokens?

• Retail vs. accredited vs. qualified purchaser vs. professional investor

• US vs. non‑US

• Jurisdiction‑specific classifications (MiFID, UCITS, BVI professional funds, etc.)

2. Where is the product registered and supervised?

• US mutual fund regimes (e.g., Form N‑1A), Reg D, Reg S offerings

• BVI professional funds overseen by the BVI Financial Services Commission

• EU UCITS or AIF structures

• Hong Kong SFC or MAS‑supervised vehicles

3. How do tokenized Treasuries intersect with stablecoin rules?

• Proposed US stablecoin legislation and the EU’s MiCA regime explicitly reference tokenized money‑market funds and government debt as eligible backing assets or directly as tokenized money‑market tokens.

• Circle’s historical reserve disclosures showed that USDC was already backed almost entirely by short‑dated Treasuries and overnight repos; tokenization simply makes that collateral itself tradable and composable on‑chain.

From a systemic risk perspective, the key issue is the convergence of:

• Stablecoins backed by Treasuries off‑chain, and

• Tokenized Treasury funds trading on‑chain as collateral and yield assets

This raises questions about:

• Rehypothecation chains – Treasury‑backed tokens posted as collateral multiple times across CeFi and DeFi venues.

• Liquidity under stress – How redemption gates, NAV swings, or regulatory actions might propagate through DeFi if a major issuer or chain is disrupted.

• Centralization risk – A handful of large asset managers (BlackRock, Franklin Templeton, Circle, etc.) hold a supermajority of the on‑chain “risk‑free” collateral (Cointelegraph).

Regulators and industry bodies (BIS, IOSCO, IMF, etc.) have started to publish work on tokenization of traditional assets and its implications for market structure, but the specific interplay with RWA DeFi is still evolving.

Cyclical Tailwinds vs. Structural Shift

Two forces are driving the tokenized US Treasuries boom: macro rates and structural improvements in financial plumbing.

1. Rate Environment (Cyclical Driver)

Between 2023 and 2025, front‑end US yields in the 4–5% range made tokenized T‑bills a clear upgrade over zero‑yield stablecoins for many holders:

• Market‑making firms parking working capital on-chain

• DAOs managing treasuries

• High‑net‑worth and institutional investors seeking dollar yield without leaving crypto rails

During market drawdowns, tokenized Treasuries have behaved as a “flight to quality” asset within the crypto ecosystem. When prices corrected in early 2025, the combined market cap of Treasury‑backed tokens reached a then‑record $4.2 billion, growing faster than stablecoins as investors rotated into safer, yield-bearing assets (CoinDesk).

2. Structural Changes (Long‑Term Driver)

Rates will eventually move, but several structural factors look durable:

• 24/7 settlement and collateral mobility

Tokenized Treasuries can move across venues and blockchains at any time, which is attractive for derivatives, repo‑like financing, and cross‑margin setups.

• Interoperability between TradFi and DeFi

Banks and asset managers can keep their core fund structures and custodians intact while allowing DeFi protocols, exchanges, and fintech platforms to interact with tokenized shares.

• Programmability and integration

DeFi and fintech builders can treat on‑chain Treasuries as a primitive, integrating them into payment flows, Treasury‑management tools, structured products, and automated yield strategies.

• Evolution of on‑chain interest‑rate curves

Protocols like Pendle use yield‑bearing assets (including RWA‑backed stablecoins and Treasury funds) to build on‑chain term structures for interest rates, which can become reference points for pricing DeFi loans, swaps, and structured products.

Put simply: even if yields compress, the infrastructure and habits forming around tokenized US Treasuries are likely to persist.

What This Means for DeFi and Fintech Builders

If you build in DeFi or fintech, tokenized Treasuries are no longer a side topic. They’re quickly becoming part of the default stack.

For DeFi Protocols

• Collateral design:

Expect more users and DAOs to want RWA collateral options—either directly (BUIDL, OUSG, TBILL) or indirectly (RWA‑backed stablecoins). Risk frameworks, oracle design, and liquidation logic will need to account for fund‑level constraints and KYC fences.

• Liquidity planning:

Because many tokenized Treasury products are permissioned, public pools may rely on RWA‑backed stablecoins and whitelisted sub‑pools rather than the raw Treasury tokens themselves.

• Rate‑market integration:

There is a clear opportunity to build or integrate with on‑chain rate markets that use tokenized T‑bills and RWA DeFi assets as underlying primitives.

For Fintech Platforms

• On‑chain cash management:

Tokenized T‑bills offer a way to provide yield‑bearing USD balances directly within digital wallets, neobanks, and B2B Treasury tools—with strong name‑brand issuers and clear underlying assets.

• Cross‑border and 24/7 rails:

Being able to move Treasury‑backed value via public blockchains allows for continuous collateral management, instant settlement of certain products, and new FX/payment flows.

• Regulatory positioning:

Many fintechs will choose to integrate via regulated, “wrapped” products (e.g., RWA‑backed stablecoins, white‑label Treasury wrappers) rather than holding the underlying tokenized fund shares, but the end user will still be effectively holding on‑chain Treasuries.

Conclusion: DeFi’s Base Money Is No Longer Purely Crypto-Native

In its early phases, DeFi made a bold bet: that a parallel financial system could be built on top of crypto-native collateral alone. That bet has been quietly modified, not because the original primitives failed, but because tokenized US Treasuries offer a powerful complement:

• Dollar‑denominated, state‑backed collateral

• Familiar risk profile for institutions

• 24/7, programmable settlement on public blockchains

Today, DeFi’s monetary base is a blend of:

• Crypto‑native assets (ETH, staked ETH, BTC derivatives)

• Fiat‑backed stablecoins (USDC, USDT, others)

• Tokenized US Treasuries and RWA‑backed instruments

Whether the current $9 billion tokenized Treasury market grows to $80 billion or more will depend on interest rates, regulatory clarity, and how aggressively institutions and protocols integrate these instruments. But the direction of travel is clear:

• The plumbing is live on Ethereum, Solana, and other networks.

• Major asset managers have moved from pilots to production.

• DeFi protocols are adapting their collateral frameworks to a world where the “risk‑free rate” is increasingly available on‑chain.

The open question is no longer if traditional collateral migrates to blockchain rails—it’s how quickly DeFi and fintech infrastructure will rewire around tokenized US Treasuries as a core building block.