The market for tokenized U.S. Treasuries surged 125% over the last year to hit a record $8.86 billion, according to data from RWA.xyz. This rapid expansion has birthed a new liquidity model dubbed the “programmable cash loop,” creating a structural disadvantage for traditional banks that rely on slower, non-yielding settlement layers.
The “Programmable Cash” Loop
The driver of this growth is not merely yield, but utility. Unlike traditional T-bills, which sit idle in custody, on-chain treasuries function as yield-bearing collateral. Traders can now hold assets like BlackRock’s BUIDL or Franklin Templeton’s BENJI to earn ~3.8% APY while simultaneously pledging them as margin for trading or lending. This eliminates the opportunity cost of holding idle stablecoins.
“Tokenized U.S. Treasuries are shifting from passive yield to collateral for trading, credit, and repo transactions… entering the normal financial workflow rather than sitting apart as a crypto experiment.”
BlackRock’s BUIDL fund remains the dominant force, commanding approximately $2.85 billion in assets under management (AUM). Franklin Templeton’s BENJI follows with over $865 million. The success of these products has forced a re-evaluation of settlement infrastructure among legacy institutions.
Institutional Reaction
Traditional banks are reacting to the threat of liquidity flight. The efficiency of 24/7 peer-to-peer settlement, without T+1 delays, is proving impossible to ignore. DBS Bank, for instance, became the first lender to integrate tokenized funds for trading collateral, signaling a shift from “blockchain tourism” to production-grade implementation.
As liquidity deepens, the spread between on-chain risk-free rates and traditional bank deposits is accelerating the migration of institutional capital on-chain.
