Demand for tokenized government bonds surges ── Crypto asset investors pay attention to TradFi’s yield | coindesk JAPAN | Coindesk Japan

Rising yields in traditional financial markets are attracting money from crypto investors. Demand for tokenized U.S. Treasurys in particular has skyrocketed.

According to data compiled by CoinDesk, for example, the market capitalization of tokenized money market funds (MMF) is approaching $500 million (approximately ¥68 billion, equivalent to ¥135 to the dollar), quadrupling since the beginning of the year. ing.

MMFs are traditional investment products centered on short-term government bonds, and yields can be obtained relatively safely. MMFs are widely popular because the banking crisis has eroded trust in banks and because they offer 4% to 5% yields, which are more favorable than bank deposits.

Not only general investors but also crypto asset investors are paying attention to US Treasuries. As such, many platforms are figuring out how to tokenize government bonds and offer them on the blockchain.

Franklin Templeton’s Franklin OnChain US Government Money Fund (FOBXX), a pioneer and largest fund in the field, had $276 million outstanding at the end of April. It’s nearly tripled since early January.

Rivals are rapidly catching up. According to Dune Analytics, Ondo Finance’s OUSG and Matrixdock’s SBTB launched in January and have raised $132 million and $72 million, respectively, for tokenized products backed by short-term government bonds.

Newer entrants have also raised significant amounts of money. Switzerland-based Backed Asset’s tokenized short-term government bond fund (bIB01) has $4.6 million in assets under management since its launch in March, according to Etherscan.

Singapore-based OpenEden has raised $4.8 million in two months, according to Dune data.

tokenization wave

Tokenization of Real World Assets (RWAs) like government bonds has emerged as the hottest trend for crypto assets in 2023. US bank JPMorgan Chase called it “blockchain’s killer app,” while Bank of America called it a “key driver” of crypto adoption.

Tokenized MMFs are in high demand, especially among those holding large amounts of stablecoins. Specifically, they include crypto investment funds, crypto companies, and decentralized autonomous organizations (DAOs), according to OpenEden co-founder Eugene Ng.

These big investors are taking an increasingly sophisticated approach to on-chain cash management, said Justin Schmidt, president and COO of Ondo Finance.

“Low-risk assets with meaningful yields in token form can serve as a valuable option for CFOs to successfully run their finance operations.”

The fact that existing financial institutions are fusing traditional finance and blockchain technology to enter this field is also driving growth, says Digital Asset, which provides research and crypto asset data for institutional investors. Research CEO Doug Schwenk said.

“Big names like Franklin Templeton and Ondo Finance are bringing confidence to assets that are often viewed with skepticism.”

｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
｜Image: Unsplash, Modified by CoinDesk
｜Original: Demand for Tokenized Treasury Bonds Soars as Crypto Investors Chase TradFi Yield