U.S. Treasury bonds are arguably the most active and largest sector in the RWA (Real World Asset) tokenization space. With the participation of traditional financial institutions worldwide, on-chain demand for Treasury bond assets is both real and rapidly growing.
For example, Blackstone's BUIDL fund has a multi-billion dollar scale and can be used as collateral for derivatives. Currently, such tokens are still mainly for qualified investors and are subject to minimum investment amounts and whitelist controls.
This report analyzes the actual situation of 12 tokenized U.S. Treasury bonds, and explains the innovative opportunities generated by the tokenization of U.S. Treasury funds and the RWA market from the aspects of token overview, regulatory framework and issuance structure, on-chain application scenarios, insights and limitations, as well as some limitations in terms of compliance, supervision and technology. Understanding this information will help investors and developers formulate more reasonable strategies.
At the same time, we also see that similar to the view mentioned in the previous article "M&A Amount Reaches a New High, Web3 Industry Officially Enters the Upstream and Downstream Integration Period", the B2B model may be the mainstream path for future RWA on-chain applications, and institutions will have a lot to do in the packaging and distribution of "returns": the combination of large financial institutions and DeFi protocols allows bond fund tokens to indirectly benefit retail users through stablecoins or investment portfolios.
We compiled “What I Learned from Analyzing 12 Tokenized US Treasuries” in the hope of providing a clearer understanding of this important RWA section and discussing it together.
Written by 100y / Four Pillars
Compiled by: ODIG Invest
Original report: https://4pillars.io/en/issues/what-i-learned-from-analyzing-12-tokenized-us-treasuries
Core ideas:
In the RWA market, one of the most active tokenized assets is U.S. Treasury bonds, primarily due to their strong liquidity, stability, relatively high yields, growing institutional participation, and suitability for tokenization.
The tokenization of U.S. Treasury bonds does not involve any special legal mechanisms. Instead, it is achieved by switching the transfer agent, which is responsible for maintaining the official shareholder register, from using a traditional internal database to a blockchain.
This article proposes three frameworks for analyzing major U.S. Treasury tokens: the first is a token overview, including protocol details, issuance size, number of holders, and management fees; the second is the regulatory framework and issuance structure; and the third is on-chain application scenarios.
Because U.S. Treasury bond tokens are digital securities, they must comply with securities laws and related regulations. This has significant implications for the scale of issuance, the number of holders, and on-chain application scenarios. This article explores how these seemingly unrelated factors interact.
Finally, contrary to popular belief, U.S. Treasury bond tokens do face numerous limitations. The final section of the article provides an in-depth analysis of these constraints.
1. Everything can be tokenized
“Every stock, every bond, every fund, every asset can be tokenized.” — Larry Fink, CEO of BlackRock.
Since the passage of the GENIUS Act in the United States, global interest in stablecoins has rapidly increased. But the question is: Are stablecoins really the destination?
Stablecoins, as the name suggests, are tokens pegged to fiat currencies and running on a public blockchain. Ultimately, they are "money," and money must be used in a context. Stablecoins are used in remittances, payments, clearing, and many other areas.
However, the area that is now considered to be able to truly unleash the potential of stablecoins is RWA.
RWAs, or Real-World Assets, refer to various tangible assets represented on a blockchain via digital tokens. However, in the blockchain industry, RWAs more commonly refer to traditional financial assets such as commodities, stocks, bonds, and real estate.
So, why has RWA become the next hot topic after stablecoins?
The reason is that blockchain not only has the potential to change currency itself, but also has the ability to fundamentally innovate the "backstage" of traditional financial markets.
Today's traditional financial markets still rely on extremely outdated infrastructure. While fintech companies have indeed improved the front-end experience for retail customers, making financial products and securities more accessible, the back-end of transactions remains lagging and severely outdated.
Take the US stock and bond trading markets, for example. Their current structure was established in the 1970s, triggered by the "Paperwork Crisis" of the late 1960s. Subsequently, the US enacted the Securities Investor Protection Act and a series of securities law amendments, and established institutions such as the Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC).
In other words, this complex system has been in place for more than 50 years, accompanied by long-term problems such as excessive intermediaries, settlement delays, lack of transparency, and high compliance costs.
Blockchain has the potential to fundamentally improve this outdated market structure, making it more efficient and transparent. If the backend of the financial market can be upgraded based on blockchain, it will be possible to achieve:
Instant Settlement
Programmable finance driven by smart contracts
Direct ownership without intermediaries
Greater transparency
Lower costs
Fractional investing
And more innovative models.
Because of this potential, many public institutions, financial institutions, and businesses are actively promoting the on-chain tokenization of financial assets, such as:
Robinhood has announced plans to support stock trading through its own blockchain network and has submitted a proposal to the SEC for a federal regulatory framework for RWA tokenization.
BlackRock has partnered with Securitize to launch BUIDL, a $2.4 billion tokenized money market fund.
SEC Chairman Paul Atkins has also publicly expressed support for stock tokens, and the SEC's internal crypto working group is promoting the institutionalization of regular meetings and roundtable discussions on RWAs.
Hype aside, the RWA market is actually growing rapidly. As of August 23, 2025, the total value of RWAs issued has reached $26.5 billion, representing growth of 112%, 253%, and 783% compared to one year, two years, and three years ago, respectively.
The types of financial assets being tokenized are diverse, but the fastest-growing sectors are U.S. Treasuries and private credit, followed by commodities, institutional funds, and equities.
2. U.S. Treasury bonds
In the RWA market, the most active tokenization sector is undoubtedly U.S. Treasury bonds. As of August 23, 2025, the U.S. Treasury RWA market size was approximately $7.4 billion, a 370% increase over the past year.
It is worth noting that traditional financial institutions and DeFi platforms around the world are actively entering this field. For example:
BlackRock’s BUIDL fund leads the pack with approximately $2.4 billion;
DeFi protocols such as Ondo have launched funds such as OUSG based on RWA tokens backed by government bonds such as BUIDL and WTGXX, maintaining a scale of around US$700 million.
Why are U.S. Treasury bonds the most active and largest tokenized sector in the RWA market? There are several main reasons:
Overwhelming liquidity and stability: U.S. Treasuries have the deepest liquidity in the world and are considered safe assets with almost no default risk, making them highly credible.
Global accessibility: Tokenization improves the investment accessibility of U.S. Treasuries, making it easier for overseas investors to participate.
Increased institutional participation: Large institutions such as BlackRock, Franklin Templeton, and WisdomTree lead the market through tokenized money market funds and U.S. Treasury products, providing strong trust endorsement for investors.
Yield: U.S. Treasury yields are stable and relatively high, averaging around 4%.
Convenience of tokenization: Although there is currently no regulatory framework specifically for U.S. Treasury RWAs, basic tokenization is still feasible under existing regulations.
3. The Tokenization Process of U.S. Treasury Bonds
So, how are U.S. Treasury bonds tokenized and put on the blockchain?
While at first glance, this might seem like a complex legal and regulatory framework, the tokenization of U.S. Treasury bonds is actually accomplished in a straightforward manner, adhering to existing securities regulations. (Of course, since different token issuance structures vary, only representative approaches are described here.)
Before explaining the tokenization process, it is important to clarify an important point: the RWA tokens based on U.S. Treasury bonds currently issued on the market do not directly tokenize the Treasury bonds themselves, but rather tokenize funds or money market funds with U.S. Treasury bonds as underlying assets.
Traditionally, public asset management funds, such as U.S. Treasury bond funds, are required to appoint a transfer agent registered with the SEC. A transfer agent is a financial institution or service company that maintains investor fund holding records on behalf of the securities issuer. Legally, a transfer agent is the central institution responsible for managing securities registration and ownership, responsible for formally maintaining the register of fund investors' shares.
The tokenization method of the U.S. Treasury bond fund is very straightforward: fund shares are mapped to on-chain tokens, and the transfer agent maintains the official shareholder register through a blockchain-based system. In other words, the proprietary database originally used to record shareholder information is migrated to the blockchain.
Of course, because the US lacks a clear regulatory framework specifically for RWAs, holding tokens isn't legally equivalent to owning fund shares. However, in practice, transfer agents manage fund shares based on on-chain token holdings. Therefore, barring any hacking or operational incidents, token ownership is, in most cases, indirectly equivalent to ownership of fund shares.
4. Main protocols and RWA analysis standards
As U.S. Treasury-backed funds are the most actively tokenized sector within the RWA industry, numerous tokenization protocols have issued related RWA tokens. The table above summarizes the major protocols and tokens, and the report divides its analysis into three parts.
Part 1: Token Overview
This section includes an overview of the token issuance protocol, the issuance size and number of holders, the minimum investment amount, and management fees. Because each protocol differs in fund structure, tokenization method, and degree of on-chain application, starting with the token issuance protocol provides a quick overview of its characteristics.
Issuance scale: It is an important indicator for understanding the size and popularity of a fund.
Number of holders: This can reveal the legal structure of the fund and its on-chain application scenarios.
If the number of holders is small, it is likely that the investors must be high-net-worth accredited investors or qualified purchasers in accordance with securities laws.
This also means that except for whitelisted wallets, the holding, transfer or trading of tokens will be more restricted, and due to the limited investor base, such tokens may not be widely used in DeFi protocols.
Part II: Regulatory Framework and Issuance Structure
This section analyzes which country’s regulatory framework the underlying fund follows, as well as the various entities involved in fund management. Among the 12 US Treasury bond fund RWA tokens analyzed, the regulatory frameworks can be broadly categorized as follows:
Regulation D Rule 506(c) & Investment Company Act 3(c)(7)
The most commonly used regulatory framework. Rule 506(c) allows for public fundraising from unspecified investors, but all investors must be accredited investors, and the issuer must rigorously verify investor identities through tax records, asset verification, and other materials. The 3(c)(7) exemption allows private equity funds to avoid registration with the SEC, requiring all investors to be qualified purchasers and the fund to remain privately held.
Using both together can expand the investor base while effectively circumventing regulatory burdens such as registration and information disclosure. This is applicable not only to US funds but also to qualified overseas funds.
Major funds: BUIDL, OUSG, USTB, VBILL.
Section 2a-7 of the Investment Company Act of 1940
This model applies to SEC-registered money market funds. It is required to maintain a stable value, invest only in ultra-short-term, high-credit instruments, and ensure high liquidity. Unlike the aforementioned framework, this model allows for public issuance to ordinary investors. Therefore, the minimum investment amount for tokens is low, making it easier for investors to participate.
Main funds: WTGXX, BENJI.
Cayman Islands Mutual Funds Law
This law applies to open-end funds established in the Cayman Islands, offering flexible issuance and redemption options. Cayman Islands funds backed by U.S. Treasury bonds must comply with this law. The minimum initial investment is typically set at US$100,000 or more.
Main fund: USYC.
British Virgin Islands (BVI) Securities and Investment Business Act 2010 (Professional Funds)
This is the core legal framework for all BVI investment funds and investment companies. Professional funds are intended for professional investors, not the general public, and require a minimum initial investment of US$100,000. It is important to note that if a BVI fund wishes to raise capital from US investors, it must also separately comply with US Regulation D Rule 506(c). Simply complying with BVI regulations is not sufficient to attract US investors.
Main funds: JTRSY, TBILL.
other
Funds established in different countries follow corresponding regulatory frameworks. For example, Spiko USTBL issued in France complies with the UCITS Directive (2009/65/CE) and the MMF Regulation (EU 2017/1131); Libeara ULTRA issued in Singapore complies with the Securities and Futures Act 2001;
In order to make the comparison more intuitive, the translator has organized the above information into a table:
In terms of fund issuance structure, there are seven key participants:
Fund Entity: A legal entity that pools investor funds, usually a US trust or an offshore fund established in the BVI or Cayman Islands.
Fund Manager: The entity that establishes a fund and is responsible for its overall operation.
Investment Manager: Responsible for investment decisions and portfolio management, sometimes the same entity as the fund manager.
Fund Admin: Responsible for back-end affairs such as accounting, net asset value calculation, and investor report preparation.
Custodian: Safe custody of fund assets (bonds, cash, etc.).
Transfer Agent: Manages the shareholder register and legally records and maintains ownership of funds or shares.
Auditor: An independent accounting firm that conducts external audits of fund accounts and financial statements, which is a key link in protecting the rights and interests of investors.
Part 3: On-chain application scenarios
One of the biggest advantages of bond fund tokenization lies in its potential use within the on-chain ecosystem. While regulatory compliance and whitelisting restrictions hinder direct use of bond fund tokens in DeFi, DeFi protocols like Ethena and Ondo have already used tokens like BUIDL as collateral to issue stablecoins or include them in portfolios, providing indirect exposure to retail investors. In fact, BUIDL's rapid expansion is due to its integration with mainstream DeFi protocols, and it has now become the leading bond token product.
Cross-chain solutions are also crucial for on-chain applications. Most bond fund tokens will not only be issued on a single network, but will also be distributed across multiple networks, providing investors with more options.
While bond fund tokens don’t require as much liquidity as stablecoins (and in fact, they generally don’t have that much liquidity), cross-chain solutions are still important because they can significantly improve the user experience and allow investors to seamlessly transfer bond fund tokens between multiple networks.
5. Revelation
In a subsequent RWA report, we will conduct a detailed analysis of 12 major US Treasury bond fund RWA tokens. Before that, let me share some insights and limitations found in this research.
Difficulty in on-chain adoption: RWA tokens are not free to use simply because they are tokenized; they remain digital securities and must adhere to real-world regulatory frameworks. Fundamentally, all bond fund tokens can only be held, transferred, and traded between whitelisted wallets that have completed KYC. This barrier to entry makes it nearly impossible for bond fund tokens to directly enter permissionless DeFi.
Limited number of holders: Due to regulatory barriers, the number of bond fund token holders is generally low. Money market funds, such as WTGXX and BENJI, which are accessible to retail investors, have relatively large holders. However, most funds require investors to be accredited, professional, or high-net-worth individuals, significantly limiting the potential investor base and preventing the number of holders from breaking into double digits.
On-chain B2B Application Scenarios: Therefore, currently, no bond fund tokens are directly applicable to retail DeFi scenarios. Instead, these tokens are often adopted by large DeFi protocols. For example, Omni Network uses Superstate's USTB for treasury management, while Ethena issues the stablecoin USDtb using BUIDL as collateral, indirectly benefiting retail investors.
Regulatory fragmentation and lack of standards: Bond fund tokens are issued by funds established in different countries and follow widely varying regulatory frameworks. For example, BUIDL, BENJI, TBILL, and USTBL may all appear to be bond fund tokens, but their regulatory frameworks are completely different, leading to significant differences in investor qualifications, minimum investment amounts, and usage scenarios. This regulatory fragmentation increases investment complexity. In the absence of unified standards, bond fund tokens are difficult to widely adopt in DeFi protocols, limiting their on-chain application.
Lack of a dedicated regulatory framework for RWAs: Currently, there is no clear regulatory framework for RWAs. While the transfer agent in a bond fund token records the shareholder register on the blockchain, on-chain token ownership is not yet legally equivalent to real-world security ownership. To bridge the gap between on-chain and real-world laws, dedicated regulations are needed.
Insufficient adoption of cross-chain solutions: While nearly all bond fund tokens support multi-network issuance, actual cross-chain solutions are still rare. Broader adoption of cross-chain solutions is needed in the future to avoid liquidity fragmentation and improve user experience.
*This article is for learning and reference purposes only. We hope it is helpful to you. It does not constitute any investment advice. DYOR.
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