The market for tokenized US Treasuries is projected to experience substantial growth, potentially surpassing $3 billion by the end of 2024, according to Tom Wan, a research strategist at 21.co. Wan attributes this surge to the increasing adoption of tokenized financial products, as detailed in a recent post on X.
Key Drivers and Market Dynamics
Wan points out that the primary driver behind this rapid growth is the diversification of holdings by decentralized autonomous organizations (DAOs) into tokenized US Treasuries. To meet the $3 billion target, the market would need to nearly double its current size by the year’s end.
Leading Players: Securitize and BlackRock
Major global financial entities like Securitize and BlackRock are at the forefront of this movement, offering tokenized treasury products that are drawing significant interest. Wan notes, “With these two projects allocating to tokenized US Treasuries, we could see the total market cap of tokenized US Treasuries increase to $3B+ by the end of 2024.”
Currently, tokenized US government securities have amassed over $1.6 billion in total assets under management (AUM), as reported by Dune Analytics. A significant portion of this market is driven by BlackRock’s USD Institutional Digital Liquidity Fund, ticker symbol BUIDL. This fund has quickly become the largest tokenized treasury fund, overtaking Franklin Templeton’s fund. Within six weeks, BUIDL amassed over $375 million in market capitalization and now holds over $528 million, representing a 28.8% market share.
Wan believes that BlackRock’s fund will significantly boost inflows into tokenized treasuries. He adds, “As laid out by Securitize and BlackRock, their strategy aims to provide the crypto ecosystem with access to risk-free US Treasury yields without leaving the blockchain ecosystem.”
Broader Implications and Future Prospects
The potential of tokenization extends beyond US Treasuries. The world’s largest management consulting firm predicts that tokenization could become a multi-trillion-dollar market. A report by the Global Financial Markets Association (GFMA) and Boston Consulting Group estimates that the global value of tokenized illiquid assets will reach $16 trillion by 2030. Even more conservative estimates from Citigroup suggest that $4 trillion to $5 trillion worth of tokenized digital securities could be minted by 2030.
Recognizing this potential, major companies are making significant moves in the tokenization space. Goldman Sachs, for instance, plans to launch three new tokenization products later this year in response to growing client interest.
Notable Protocols and Platform Growth
Certain protocols have significantly driven this growth, particularly in terms of active user engagement. Digital carbon market platforms like Toucan and KlimaDAO, as well as the real estate tokenization protocol Propy, have experienced substantial user growth.
Both public and private blockchains are incorporating various assets into their ecosystems. Noteworthy examples include Franklin Templeton’s U.S. Government Money Fund expanding from Stellar to Polygon, Backed Finance launching a tokenized short-term U.S. Treasury bond exchange-traded fund (ETF), and UBS Asset Management deploying a tokenized money market fund (MMF) on the Ethereum blockchain.
In summary, the tokenization of US Treasuries is poised for remarkable growth, driven by strategic initiatives from major financial players and an increasing interest in blockchain-based financial products. As the market evolves, it is expected to attract significant investments, paving the way for a broader adoption of tokenized assets in the global financial landscape.
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