Tokenized Treasuries: Why BlackRock’s BUIDL Is Leading the $5.6 Billion Market

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27 Jul 2025

The tokenized treasury market has exploded in 2025, reaching a staggering $5.6 billion in market capitalization, driven by a 544.8% surge from 2024. At the forefront of this revolution is BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which has captured a 44% market share with $2.5 billion in assets under management (AUM) since its launch in July 2024. As part of the broader RWA coins ecosystem, tokenized treasuries represent a transformative bridge between traditional finance (TradFi) and decentralized finance (DeFi), offering stable yields, instant settlement, and blockchain transparency. This article delves into the mechanics of treasury tokenization, the structure and appeal of BUIDL, Ethereum’s dominance in this sector, and why institutional investors are flocking to this rapidly growing market. With data from sources like CoinDesk, RWA.xyz, and Cointelegraph, we explore how BUIDL is setting the standard for tokenized assets in 2025 and what it means for the future of finance.

What Are Tokenized Treasuries?

Tokenized treasuries are digital representations of U.S. Treasury securities, such as T-bills or bonds, issued as tokens on a blockchain. These tokens are backed 1:1 by the underlying assets, ensuring stability and predictable yields. Unlike traditional treasuries, tokenized versions offer:

24/7 Trading: Instant settlement on blockchains like Ethereum and Solana.
Fractional Ownership: Lower entry points for investors, starting at $100.
DeFi Integration: Use as collateral in lending protocols like Aave or MakerDAO.
Transparency: Blockchain’s immutable ledger ensures verifiable ownership and transactions.

In 2025, the tokenized treasury market has grown from $769 million in January 2024 to $5.6 billion by April, driven by high U.S. interest rates (5.25–5.5% federal funds rate) and institutional adoption.

Market Growth: A 544.8% Surge

The tokenized treasury sector has seen unprecedented growth, reaching $5.6 billion in 2025, a 544.8% increase from 2024, according to RWA.xyz.

High Yields: Treasury yields outpace many DeFi yields, attracting risk-averse investors.
Institutional Confidence: Major players like BlackRock, Franklin Templeton, and Fidelity are tokenizing assets, signaling mainstream adoption.
Regulatory Clarity: The EU’s MiCA framework and U.S. GENIUS Act proposals provide a supportive environment.

BlackRock’s BUIDL: Structure and Mechanics

Launched in July 2024 in partnership with Securitize, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) is a tokenized money market fund backed by U.S. Treasury bills, repurchase agreements, and cash. By June 2025, BUIDL’s AUM reached $2.5 billion, capturing 41% of the tokenized treasury market, per Cointelegraph.

Asset Backing: 1:1 peg to the U.S. dollar, with assets held by BNY Mellon.
Yield Distribution: Daily dividends paid as new tokens, reflecting Treasury yields.
Multi-Chain Availability: Deployed on Ethereum (91% of supply), Solana, Polygon, Aptos, Arbitrum, Optimism, and Avalanche.
Regulatory Compliance: Restricted to accredited investors with KYC/AML checks via Securitize Markets.

Mechanics of Treasury Tokenization

Tokenizing treasuries involves converting ownership rights into digital tokens on a blockchain. For BUIDL:

Asset Custody: BNY Mellon holds cash and T-bills, ensuring 1:1 backing.
Token Issuance: Securitize mints BUIDL tokens, each representing a share of the fund.
Yield Distribution: Interest from T-bills is distributed daily as new tokens, offering stable returns (4–5% APY in 2025).
Blockchain Settlement: Tokens are tradable 24/7 on public blockchains, with cross-chain swaps enabled by Wormhole.
Compliance: Only whitelisted wallets meeting U.S. securities laws can hold or transfer BUIDL tokens.

BUIDL’s Growth Trajectory

BUIDL’s AUM grew 291% from January to April 2025, reaching $2.5 billion, per RWA.xyz.

March 2024: Launched on Ethereum with $375 million AUM, overtaking Franklin Templeton’s BENJI.
March 2025: Surpassed $1 billion AUM, boosted by a $200 million allocation from Ethena.
June 2025: Expanded to seven blockchains, with $2.5 billion AUM and 44% market share.

Why BUIDL Stands Out

Institutional Backing: BlackRock’s $11.6 trillion AUM lends credibility, attracting DAOs, stablecoin issuers, and TradFi firms.
Cross-Chain Strategy: Availability on Ethereum, Solana, and Layer-2s reduces fees (20 basis points on Aptos vs. 50 on Ethereum).
DeFi Integration: Used as collateral in Aave, MakerDAO, and FalconX, enhancing liquidity.
Compliance Focus: Strict adherence to U.S. securities laws ensures institutional trust.

Institutional Appeal: Why Firms Are Flocking to Tokenized Treasuries

Stable Yields in a High-Rate Environment

With U.S. interest rates at 5.25–5.5% in 2025, tokenized treasuries offer stable, low-risk yields (4–5% APY) compared to volatile DeFi returns. BUIDL’s daily dividend payouts provide predictable income, making it attractive for:

Stablecoin Issuers: Circle and Tether use BUIDL to back USDC and USDT, stabilizing their reserves.
Crypto Hedge Funds: Firms like FalconX use BUIDL as collateral for trading.
DAOs: Decentralized organizations invest in BUIDL for treasury management, with $520 million in deposits from DAOs in 2025.

Bridging TradFi and DeFi

Tokenized treasuries like BUIDL bridge TradFi and DeFi by:

Enhancing Liquidity: Instant settlement on blockchains eliminates T+2 delays in traditional markets.
Reducing Costs: Blockchain cuts intermediary fees, with BUIDL’s 20–50 basis point fees lower than traditional funds.
Enabling Composability: BUIDL tokens are used in DeFi protocols like Aave to stabilize GHO stablecoin yields.

Institutional Players in 2025

Franklin Templeton: FOBXX fund holds $776 million, operating on Stellar, Avalanche, and Ethereum.
Superstate: USTB fund manages $661 million, focusing on DeFi integration.
Ondo Finance: USDY and OUSG funds, with $586 million and $424 million, leverage BUIDL as a reserve asset.
Fidelity: Filed for “OnChain” fund with the SEC, targeting tokenized treasuries.

Regulatory Support

Regulatory advancements in 2025 are boosting institutional confidence:

EU’s MiCA: Harmonizes rules for tokenized assets, encouraging adoption in Europe.
U.S. GENIUS Act: Proposes clearer digital asset regulations, reducing uncertainty.
Singapore’s Project Guardian: Facilitates RWA tokenization trials, with DBS Bank testing tokenized bonds.

Ethereum’s Dominance in Tokenized Treasuries

Why Ethereum Leads

Ethereum hosts 74% of the $5.6 billion tokenized treasury market ($4.3 billion), with BUIDL’s $2.3 billion supply concentrated on Ethereum, per RWA.xyz. Key reasons for Ethereum’s dominance:

Robust Infrastructure: Ethereum’s smart contracts support complex tokenization logic.
Institutional Trust: BlackRock and Franklin Templeton chose Ethereum for its security and developer ecosystem.
DeFi Ecosystem: Integration with Aave, MakerDAO, and Uniswap enhances token utility.

Other Blockchains

Solana: Hosts $273 million in tokenized treasuries, with BUIDL’s $25 million deployment.
Stellar: Franklin Templeton’s FOBXX holds $474 million, leveraging Stellar’s low-cost transactions.
Polygon and Aptos: BUIDL’s expansion to Layer-2s reduces fees, with $53 million each on Aptos and Avalanche.

Cross-Chain Interoperability

Wormhole’s cross-chain bridge enables BUIDL tokens to move across Ethereum, Solana, and Layer-2s, ensuring liquidity and flexibility. This interoperability addresses the “walled-garden” problem, making tokenized treasuries more accessible.

Challenges and Risks

Regulatory Uncertainty

Despite progress, regulatory challenges remain:

U.S. Securities Classification: BUIDL tokens are securities, requiring KYC/AML compliance, limiting retail access.
Global Fragmentation: Varying regulations across jurisdictions complicate cross-border adoption.
Custody Risks: Centralized custodians like BNY Mellon introduce counterparty risk, though mitigated by strict oversight.

Centralization Concerns

BUIDL’s reliance on Securitize for compliance and whitelisting raises centralization risks. Tracy Jin of MEXC noted that permissioned blockchains could allow authorities to restrict or confiscate assets, undermining decentralization.

Liquidity Constraints

While BUIDL offers 24/7 trading, only 62 wallets hold the token, indicating thin liquidity compared to stablecoins ($180 billion market cap), per RWA.xyz. This “chicken and egg” problem limits broader adoption, though demand is growing.

Future Projections: A $10–30 Trillion Market

Market Forecasts

Experts predict significant growth for tokenized treasuries:

Tren Finance: Projects a $10 trillion RWA market by 2030, with treasuries leading.
Boston Consulting Group: Estimates a $16 trillion tokenization market, with treasuries as a key driver.
Security Token Market: Forecasts $30 trillion, driven by institutional adoption and regulatory clarity.

Key Growth Drivers

Institutional Investment: BlackRock, JPMorgan, and Fidelity are committing billions, with 48% of Swiss banks planning tokenization use cases.
DeFi Integration: Tokenized treasuries are enhancing DeFi TVL, with BUIDL used in Aave and MakerDAO.
Technological Advancements: Layer-2 solutions and zero-knowledge proofs (ZKPs) improve scalability and privacy.

Conclusion

In 2025, BlackRock’s BUIDL has solidified its position as the leader in the $5.6 billion tokenized treasury market, capturing a 44% share with $2.5 billion in AUM. Its structure—backed by U.S. Treasuries, offering daily yields, and deployed across seven blockchains—makes it a cornerstone of the RWA ecosystem. Ethereum’s dominance, hosting 74% of tokenized treasuries, underscores its role as the financial layer of Web3, while Solana and Layer-2s like Polygon enhance accessibility. Institutional appeal, driven by stable yields, regulatory compliance, and DeFi integration, is fueling BUIDL’s meteoric rise. Despite challenges like regulatory uncertainty and thin liquidity, the tokenized treasury market is poised for exponential growth, with projections of a $10–30 trillion RWA market by 2030. As Larry Fink stated, “Tokenization is the future of finance,” and BUIDL is proving it in 2025.