Banks & Exchanges Dance to $8.6B Token Tango! 🎭💸

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From yield to collateral: The $8.6 billion turning point

Portrayed U.S. Treasuries, the grandest of real-world assets (RWA), now prance into a new act. Tokenized money-market funds (MMFs), those cash-pooling jesters of short-term U.S. government securities, have swapped passive yields for the glitzy spotlight of collateral-trading, credit, and repo transactions now their new cabaret.

By late October, the market cap of these tokenized treasures soared to $8.6 billion, a leap from $7.4 billion in mid-September. BlackRock’s BUIDL, the leading man of this financial opera, parades with $2.85 billion. Circle’s USYC ($866 million) and Franklin Templeton’s BENJI ($865 million) follow like supporting actors. Fidelity’s fledgling MMF, the new kid on the block, bursts onto the stage with $232 million.

Institutional adoption: Exchanges, banks and custodians step in

Digital Treasury bills, once mere spectators, now tiptoe into the same settlement systems as their traditional kin. The first practical test of fund-as-collateral arrived in June when BUIDL graced Crypto.com and Deribit like a guest star at a party. By September, Bybit declared QCDT, a DFSA-approved tokenized MMF, as collateral-a move allowing clients to trade with it as if it were a golden ticket, earning Treasury yields while dancing on the platform.

In traditional banking, DBS, the Singaporean pioneer, announced Franklin Templeton’s sgBENJI would join Ripple’s RLUSD on its digital exchange. The bank also piloted sgBENJI as repo and credit collateral, transforming tokenized funds from passive investments into the lifeblood of its financing empire-a financial metamorphosis worthy of a Gogolian farce.

Infrastructure and messaging: The hidden engine of tokenized finance

The machinery linking banks and blockchains has advanced. Chainlink and Swift, with UBS Tokenize as their jester, completed a pilot using ISO 20022 messages to process tokenized fund subscriptions and redemptions. In simpler terms, this test proved banks’ familiar message formats can now trigger blockchain smart contracts-like a well-rehearsed play where the actors forget their lines but still receive applause.

This pilot marks a clear step toward interoperability. Tokenized funds, once trapped in digital silos, now speak ISO 20022 fluently. Custodians and fund administrators can now move these assets through traditional workflows, avoiding the chaos of custom links. For investors, this means tokenized Treasuries are no longer crypto experiments but the latest entrants in the financial ballet.

Market composition and frictions

The market, still led by a handful of large funds, now faces a slow unraveling of its monopoly, much like a once-revered tsar now challenged by a troupe of upstart court jesters. BlackRock’s BUIDL still holds 33% of the throne, while Franklin Templeton’s BENJI, Ondo’s OUSG, and Circle’s USYC share 9% to 10% each-like a crumbling empire redistributing its jewels.

A glance at the table below reveals this shifting balance. The tokenized Treasury realm, once a one-man show, now hosts a cast of regulated managers. This diversification spreads liquidity like a well-timed punchline, making collateral acceptance more practical for venues and banks craving varied exposure.

Friction, however, persists not in demand but in regulatory quagmires. Most funds are reserved for Qualified Purchasers-those institutional or high-net-worth individuals who’ve mastered the art of financial jargon. Cut-off times, too, act as invisible puppeteers, limiting redemptions to specific hours. During liquidity crises, these schedules delay withdrawals like a bureaucratic farce, making tokenized Treasuries behave less like 24/7 crypto assets and more like clockwork traditions.

Tokenized funds still trade on less liquid markets, dependent on blockchain cycles. Exchanges apply heavier discounts-Deribit’s 10% margin reduction versus traditional repos’ 2%. These disparities reflect operational quirks, not credit risks, and as tokenized Treasuries mature, these discounts may shrink like a deflated balloon at a child’s birthday party.

Outlook: From pilots to production

The coming quarter promises to stitch together the pilots mentioned here, weaving a tapestry of intraday collateral use. DBS’s repo tests, exchanges’ experiments, and Swift x Chainlink’s ISO 20022 integration all hint at routine operations. Meanwhile, the U.S. CFTC’s Tokenized Collateral and Stablecoins Initiative, launched Sept. 23, could turn these pilots into production-level tools. Tokenized Treasuries may soon bridge bank balance sheets, stablecoin liquidity, and onchain finance-a grand finale in the financial opera.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon.

CryptoMoon does not endorse the content of this article nor any product mentioned herein. Readers should do their own research before taking any action related to any product or company mentioned and carry full responsibility for their decisions.

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2025-11-03 20:01