Tokenised Treasury Funds Gain Popularity Among Crypto Investors

Strategic Insights -

A growing number of crypto traders and companies are shifting their focus from stablecoins to tokenised versions of money market and Treasury bond mutual funds, driven by the promise of earning a yield and enhanced liquidity. Total assets held in tokenised Treasury products have jumped 80% this year to $7.4 billion, with funds run by BlackRock, Franklin Templeton, and Janus Henderson experiencing rapid growth. Investors are increasingly using tokenised funds as an easy-to-trade form of collateral in crypto derivatives transactions, as they offer a cheaper and more efficient way to buy mutual funds and enhance liquidity.

Key Takeaways:

  • Total assets held in tokenised Treasury products have jumped 80% this year to $7.4 billion, according to RWA.xyz.
  • Funds run by BlackRock, Franklin Templeton, and Janus Henderson have grown particularly rapidly, with combined assets tripling.
  • Tokenised money market funds provide more security than stablecoins, said analysts, while offering investors a yield.
  • Crypto investors can use tokenised products to hold any spare cash "in a format that is easy to use and, unlike most stablecoins, allows them to earn a yield", wrote Stephen Tu, an analyst at Moody's, in a recent report.
  • Stablecoin issuers are investing reserves in high-quality, yield-bearing assets, such as tokenised Treasury funds.
  • Investors are starting to use tokenised US Treasury products as collateral for margin trades, such as interest rate swaps.
  • Several groups, including US trading company DRW Trading and bond market platform Tradeweb Markets, have collectively invested $135 million in Digital Asset, a company focusing on tokenised collateral and payments.
  • Tokenised collateral allows companies to move their margin and payments as quickly as their other crypto assets, leading to "pretty dramatic" efficiencies and cost savings, said Yuval Rooz, chief executive of Digital Asset.

Statistics:

  • Total assets held in tokenised Treasury products: $7.4 billion (RWA.xyz)
  • Growth of tokenised Treasury funds: 80% this year (RWA.xyz)
  • Combined assets of funds run by BlackRock, Franklin Templeton, and Janus Henderson: $409 million (Janus Henderson)
  • Investment in Digital Asset by several groups: $135 million (Digital Asset)
  • Market for tokenised mutual funds, bonds, and exchange-traded notes estimated by McKinsey: $2 trillion (McKinsey)
  • Assets managed by traditional US money market funds: $7 trillion (Traditional US money market funds)

Sources:

  • RWA.xyz
  • Stephen Tu, Analyst at Moody's, in a recent report
  • Digital Asset
  • McKinsey
  • Traditional US money market funds
  • Janus Henderson
  • FundsDLT
  • Clearstream
  • Lex
  • FT.com