Tokenized Treasuries: Understanding on-chain ownership
Tokenized Treasuries transform ownership recording of US government debt without moving T-bills to the blockchain, according to regulatory insights.
Simon Belanger 5 min read
The fastest-growing category in crypto over the past eighteen months has not been a new chain. It has been short-term US government debt. Money-market funds run by BlackRock, Franklin Templeton and a few specialists now have blockchain-native share classes whose tokens settle and pay yield on public networks around the clock. The label is “real-world asset tokenization,” broad enough to cover gold, private credit and equities, but tokenized Treasuries hold most of the money. Understanding them means being precise about what the token is not.
What a tokenized Treasury fund actually is
Nothing about tokenization moves a Treasury bill onto a blockchain. The bills sit where they always sat, in accounts at regulated custodians, held by a fund organized under conventional securities law. What the token changes is how ownership of that fund is recorded. Franklin Templeton’s BENJI is the clearest illustration: one BENJI equals one share of the Franklin OnChain U.S. Government Money Fund (FOBXX), and the fund’s transfer agent, the entity legally responsible for the shareholder register, maintains the official ownership record through a blockchain-integrated system that writes transactions to public networks. The chain is recordkeeping technology, not a replacement for the legal apparatus around it. BENJI runs across nine networks, and yield accrues daily through newly minted tokens airdropped to holders.
BlackRock’s BUIDL splits the same work between different firms: BlackRock manages the portfolio, Securitize acts as transfer agent, Bank of New York Mellon is custodian. The token is permissioned and whitelisted, restricted to US qualified purchasers, minimum investment five million dollars. That permissioning is the design, not a defect: a token anyone could hold anonymously would not be a regulated fund share.
Three products, three different legal wrappers
The meaningful differences between the major products are legal rather than technical, and they determine who may hold them and what claim a holder has. BUIDL and BENJI are fund shares. Ondo Finance’s two flagships are structured differently again. OUSG is a qualified-access fund that holds Treasury funds from BlackRock, Franklin Templeton, WisdomTree and Fidelity rather than the bills themselves, open only to investors who complete Ondo’s onboarding. USDY is not a fund share at all: it is a tokenized note secured by short-term Treasuries and bank demand deposits held by a collateral agent, offered under a Regulation S exemption barring sale to US persons.
That distinction carries more weight than the marketing suggests. A fund shareholder owns a proportional interest in the fund’s assets. A noteholder owns a claim against the issuing vehicle, senior and secured but still a claim whose strength depends on that vehicle surviving.
How big the market actually is
As of 24 August 2026, rwa.xyz tracked $15.64 billion across 87 tokenized US Treasury products held by 66,031 addresses, paying a seven-day average yield of 3.39 percent. Circle’s USYC led at $2.92 billion, followed by BUIDL at $2.56 billion, Ondo’s USDY at $2.16 billion, Franklin Templeton’s iBENJI at $1.72 billion. The whole tokenized real-world asset category stood at $38.15 billion that day.
Growth has been quick. CoinGecko’s 2026 RWA report measured the sector at $19.32 billion on 31 March 2026, up 256.7 percent from $5.42 billion at the start of 2025, with tokenized Treasuries contributing $9.00 billion of that increase. Three things temper the headline. Those two tallies are not comparable, since trackers count different things. Scale remains modest, stablecoins standing at $302.30 billion against $38.15 billion of tokenized assets, and IOSCO’s November 2025 report called tokenization small next to mainstream capital markets. And the line is not monotonic: the Treasury total fell 3.28 percent over the preceding thirty days. The least discussed figure is concentration, BUIDL’s $2.56 billion sitting across 105 holders.
Redemption is where the blockchain part stops
The round-the-clock claim describes the token, not the money. Transferring BENJI or BUIDL between whitelisted wallets settles in minutes on a Sunday; getting dollars out does not. BENJI redemptions are processed daily, the transfer agent burning tokens and selling the shares at prevailing net asset value before proceeds arrive by bank transfer. Ondo’s OUSG allows instant stablecoin redemption from a $5,000 minimum, but non-instant subscriptions require $100,000 and redemptions $50,000, with net asset value set once daily.
The workaround is to bolt a stablecoin exit onto the fund. Circle announced a smart contract for BUIDL investors in April 2024 that its chief executive called a near-instant, round-the-clock off-ramp into USDC. That is a secondary market facility rather than the fund’s redemption right, swapping fund exposure for stablecoin issuer exposure. These products will be stress-tested at that seam.
What regulators have actually said
The US position is clearer, and less accommodating, than the sector’s marketing implies. SEC Commissioner Hester Peirce set the tone in July 2025, writing that tokenized securities are still securities and that blockchain cannot magically transform an underlying asset. On 28 January 2026 the staffs of the Divisions of Corporation Finance, Investment Management, and Trading and Markets confirmed that the format of issuance, and whether holders are recorded on-chain or off-chain, does not affect the application of federal securities laws. Their statement separates custodial tokenization, where a third party creates a security entitlement representing an indirect interest, from synthetic tokenization, which conveys economic exposure without ownership, and warns that third-party token holders carry risks a direct holder does not, notably bankruptcy exposure to the intermediary.
International regulators have focused on the plumbing. IOSCO’s final report flagged settlement finality as unresolved, particularly on Layer 2 networks where it is unclear whether a transaction is final at confirmation or only once checkpointed to Layer 1, alongside legal uncertainty about how tokenized assets are created and transferred across jurisdictions. The CFTC moved the other way in December 2025, permitting tokenized Treasuries and money-market fund shares as derivatives collateral under Letter No. 25-39, conditioned on legal enforceability, custody and segregation, haircuts and operational resilience. The wrapper is new; the obligations are old.
What it means for an investor
For most individuals these products are simply unavailable. BUIDL requires qualified-purchaser status and five million dollars, OUSG requires onboarding into a qualified-access fund, and USDY is closed to US persons. Where retail access exists, as on parts of the BENJI platform, the yield is short-term government paper minus fees, roughly 3.4 percent at current rates, which is what an ordinary money-market fund pays without the extra layers.
The honest case for tokenization is not yield but settlement, collateral mobility and holding an interest-bearing instrument in the same wallet as everything else. Those are real for a trading desk and marginal for a saver, and against them sit risks a brokerage account does not carry: a transfer agent’s whitelist, bridge exposure across many networks, unresolved Layer 2 finality, and for notes a credit claim on an issuing vehicle. Identify which structure a product uses first, because that determines what is owned if something goes wrong.