Demand for Tokenized U.S. Treasuries Soars as Crypto Investors Enter

Growing fourfold since the beginning of the year

Tokenized US money market funds (MMFs) are booming on the back of high US Treasury yields. According to US media CoinDesk, the market capitalization of tokenized MMFs is on track to quadruple from the beginning of the year to about 68.8 billion yen ($500 million).

MMFs are investment trusts that operate in low-risk, highly liquid short-term government bonds, etc., with high principal safety and stable interest rates. According to a report by Bloomberg on the 12th, the assets of US MMFs reached a record high for the second consecutive week, with total assets reaching about 734 trillion yen ($5.33 trillion).

MMFs that offer interest rates of 4% to 5% seem to be attracting many investors against the backdrop of concerns about bank deposits and low interest rates due to a series of US bank failures.

Tokenized MMF products are being offered one after another as an investment option that appeals to cryptocurrency investors, leading to a large inflow of funds into the market.

First US Tokenized MMF

In April last year, major U.S. asset management firm Franklin Templeton announced the first “on-chain U.S. government money fund” (FOBXX) in the U.S., using the Stellar blockchain to record transactions and holdings. A year later, the tokenized fund’s assets under management exceeded 37.1 billion yen ($270 million).

Roger Baston, head of digital assets at the firm, argued that blockchain technology could reshape the investment management industry by making traditional financial instruments more transparent and reducing operating costs. “Blockchain assets like FOBXX will be able to interoperate with other digital asset ecosystems in the future,” he said.

At the end of April, the company expanded FOBXX to Ethereum’s L2 blockchain, Polygon. Announced support for Ethereum via Polygon.

Stablecoin investment destination

Ondo Finance, which provides blockchain-enabled investment products and services for institutional investors, announced in January this year a tokenized fund, the US Treasury Fund (OUSG), which invests only in US short-term government bonds. It appealed to large holders of non-interest-bearing stablecoins (over $100 billion) as an accessible product for “traditional capital markets.”

Investors receive tokens representing ownership of the fund by contributing stablecoins or USD. Fund ownership can be changed by transferring tokens, and smart contracts can also be used to conduct financial transactions, such as loans, between investors. Ondo Finance has developed a decentralized lending platform, Flux Finance, enabling the lending and borrowing of stablecoins backed by OUSG.

According to Ondo, OUSG’s assets under management (AUM) exceeded approximately ¥9.6 billion ($70 million) as of April, while Flux Finance’s total assets under management (TVL) exceeded approximately ¥5.5 billion ($40 million). It says. (including $27 million in OUSG collateral)

In the same month, Ondo also announced a new fund, OMMF, which is a tokenized US government MMF. OMMF is always issued and redeemed on business days for $1, and interest is distributed to OMMF holders in the form of new tokens every day. Therefore, it is expected that it will be used for settlement and collateral as an alternative to stablecoins.

inflow of assets

“Brands” such as investment giants Franklin Templeton and Ondo Finance are offering tokenized MMFs, “bringing credibility to assets viewed with skepticism,” says Doug Schwenk of Digital Asset Research. CEO says.

The following companies also offer tokenized MMFs, and the market appears to be experiencing significant inflows.

• Matrixdock (SBTB): 9.9 billion yen ($72 million)
• Backed Asset (bIB01): 630 million yen ($4.6 million), based in Switzerland
• OpenEden (Yield-earning TBILL token issuance): 660 million yen ($4.8 million), based in Singapore

The post Demand for Tokenized U.S. Treasuries Soars as Crypto Investors Enter appeared first on Our Bitcoin News.