Tokenized U.S. Treasuries are transitioning from passive yield to collateral for trading, credit, and repo transactions. The total market cap of tokenized Treasuries has reached $8.6 billion, led by BlackRock’s BUIDL, Circle’s USYC, and Franklin Templeton’s BENJI. Fidelity’s tokenized MMF also saw significant growth, rising to $232 million.

Exchanges, banks, and custodians are starting to accept tokenized funds as collateral. Bybit extended the concept by accepting QCDT as collateral, backed by U.S. Treasuries. DBS became the first to actively test tokenized funds, offering Franklin Templeton’s sgBENJI for trading and lending on the DBS Digital Exchange, along with Ripple’s RLUSD stablecoin.

The infrastructure connecting banks and blockchain systems has advanced, with Chainlink and Swift completing a pilot processing subscriptions and redemptions for a tokenized fund using standard ISO 20022 messages. This pilot demonstrates interoperability between banks and blockchain systems, allowing for the seamless movement of tokenized assets through traditional processes.

The tokenized Treasuries market is led by large funds like BlackRock’s BUIDL, but it is diversifying. Franklin Templeton’s BENJI, Ondo’s OUSG, and Circle’s USYC are gaining market share. Regulatory hurdles limit access to Qualified Purchasers, while cut-off times and liquidity stress can delay withdrawals. Discounts on posted value are expected to narrow as reporting standards tighten.

The next quarter will focus on connecting pilot projects, like the repo tests by DBS and experiments by exchanges. The U.S. CFTC launched the Tokenized Collateral and Stablecoins Initiative, signaling a shift from pilot projects to production-level tools. Tokenized Treasuries are set to become a vital part of the global collateral stack, bridging traditional finance with onchain assets.

Read more at Cointelegraph: Tokenized Treasuries cross $8.6B as banks and exchanges push collateral use