The Rise Of Tokenized Treasuries: How Blockchain Is Entering The Heart Of Financial Markets
Something interesting is happening in the usually quiet world of U.S. Treasury markets. Traditional asset managers who spent years dismissing cryptocurrency are now building products that live entirely on blockchains. The twist? They’re tokenizing the safest asset class in existence: government debt.
When BlackRock Inc. (NYSE:BLK) puts Treasury bills on Ethereum through its BUIDL fund, it’s not chasing trends. The wall between traditional finance and crypto is being carefully dismantled, starting with Treasuries.
Why This Happened Now
Throughout 2025, short term Treasury yields hovered between 4% and 5%. Meanwhile, stablecoins like USD Coin and Tether held over $309 billion in collective value, earning nothing for holders. The companies issuing these stablecoins earned billions parking reserves in Treasuries, but holders got zero.
That’s a $12 billion annual wealth transfer from stablecoin users to issuers. Once people did the math, the gap became obvious. Why hold a dollar token earning nothing when you could hold one earning 4%?
BlackRock introduced its BUIDL product in March 2024 to address exactly this problem. Daily dividends flow directly to digital wallets as new tokens. No intermediaries, no settlement delays, just automated yield distribution.
The fund now holds over $2 billion. Franklin Templeton (NYSE:BEN) manages over $700 million in a similar product. Hashnote’s USYC, which Circle Internet Financial acquired, holds around $1 billion. Total tokenized Treasury products across blockchains reach approximately $9 billion as of mid December 2025, according to RWA.xyz data.
That’s tiny compared to the $28 trillion Treasury market overall. But this market barely existed 18 months ago.
What Asset Managers Actually Gain
Traditional money market funds employ armies handling subscriptions, redemptions, and dividend calculations. Tokenization automates most of that. Smart contracts handle …
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