Demand for tokenized treasuries is gaining momentum, with over $1 billion in treasury notes tokenized on public blockchain networks. The launch of BlackRock’s BUIDL fund, the world’s largest tokenized treasury fund, has accelerated this trend. Tokenized treasuries are digital tokens backed by a portfolio of U.S. government obligations, issued by both blockchain-native firms and traditional institutions. These assets are becoming increasingly important as they help money market funds and their investors manage liquidity in times of market volatility.
Investors may need to meet margin calls or redeem shares for cash during volatile market conditions, increasing a fund’s liquidity risk if many investors redeemed at once. Tokenization allows investors to have round-the-clock access to liquidity on-chain, reducing the risk of a run on a fund. For example, BlackRock’s BUIDL fund enables investors to redeem their shares for USDC stablecoin through a smart contract on Ethereum without relying on intermediaries. Franklin Templeton’s FOBXX fund also supports peer-to-peer transfers to enhance liquidity and security for investors.
Tokenized treasuries enable fractional ownership of real-world assets, expanding access to a broader base of investors. This approach enhances efficiency and allows smaller investors to participate in assets that typically have high minimum investment requirements. U.S. Treasuries, being low-risk and familiar assets, provide a gateway for investors to engage with on-chain assets. Platforms like Plume Network are using blockchain technology to enable RWAs and provide investors with secure investment vehicles on public blockchains.
While the concept of tokenized treasuries offers benefits such as round-the-clock liquidity and fractional ownership, investor engagement with these assets is still uncertain. Blockchain interoperability and solutions for cash transactions on-chain are necessary to support active secondary markets. Regulatory clarity around stablecoins will help investors engage with features like 24/7 liquidity through smart contracts. Institutions like BlackRock, Franklin Templeton, and WisdomTree are leading the way in demonstrating how blockchain can streamline aspects of traditional finance.
For tokenized treasuries to succeed, investors need direct access to the blockchains on which the assets are built, and institutions must integrate their legacy systems with these blockchains. Plume Network aims to simplify the deployment process of RWA projects and provide investors with a blockchain ecosystem to invest in various RWAs. As institutional investors adopt RWAs, a new wave of retail investors is expected to inject capital into blockchain ecosystems, leading to sustainable growth and mainstream acceptance. Emerging regulatory frameworks in key jurisdictions will enhance investor appetite for stablecoins and the features they enable, driving further adoption of tokenized treasuries.
