Tokenized US Treasuries on Ethereum Pass $8 Billion

The value of tokenized U.S. Treasuries on the Ethereum blockchain surpassed $8 billion this week, part of a broader $15 billion market that has more than doubled since March 2025 as institutions adopt on-chain financial assets.

"The optimal network depends entirely on the asset’s specific requirements," a recent Chainalysis report stated, noting that institutions are choosing blockchains like Ethereum for finality while exploring others like Solana for throughput.

BlackRock’s BUIDL fund, issued on Ethereum via Securitize, has been a primary catalyst, growing to over $2 billion in assets under management since its March 2024 launch. Data from RWA.xyz shows the total market for tokenized government debt has expanded from just $5 billion in early 2025, with Franklin Templeton’s fund also expanding to the Solana network to leverage its higher transaction speeds.

This rapid shift creates a structural risk for traditional banks, as the 200 to 400 basis point yield gap between regional bank deposits and tokenized Treasuries provides a powerful incentive for corporate treasurers to move funds. The speed of these on-chain assets could allow deposit flight at a velocity that current bank liquidity models are not built to withstand.

The Yield Gap Driving a Multi-Billion Dollar Migration

The migration of Treasury assets to blockchains is a direct response to a stark yield differential. While the federal funds rate has remained above 4 percent for most of the period since Silicon Valley Bank’s 2023 collapse, regional bank deposits have offered a fraction of that return. Tokenized money market funds, however, pass the full yield (minus a small fee) to the holder. For corporate treasurers managing large cash balances, the ability to earn an additional 200 to 400 basis points on an asset with the same underlying U.S. Treasury credit risk is a compelling proposition.

This economic incentive is now being paired with superior infrastructure. A recent pilot involving JPMorgan, Mastercard, and Ripple on the XRP Ledger demonstrated a cross-border redemption of a tokenized Treasury fund that settled in under five seconds—a process that takes one to three days using traditional correspondent banking. While that pilot used the RLUSD stablecoin for settlement, the underlying principle is the same: blockchain rails eliminate settlement friction and business-hour constraints.

A Systemic Risk Hiding in Plain Sight

While the growth of on-chain assets is a validation for blockchain technology, it introduces a systemic risk that federal regulators have not yet fully addressed. According to a Federal Reserve review of SVB's failure, the 2023 bank run was limited by the speed of the Fedwire and ACH systems. Tokenized assets remove that speed limit entirely.

A corporate treasurer can now, in theory, move hundreds of millions of dollars from an uninsured bank deposit to a tokenized Treasury fund like BlackRock's BUIDL in minutes, 24/7. This collapses the 30-day stress horizon assumed by Basel III liquidity coverage ratios (LCR) into a 30-second reality. The risk lies in a regulatory gap: the tokenized funds are regulated as securities by the SEC, while the banks they could drain are supervised by the Fed, OCC, and FDIC. The framework to manage a high-velocity, cross-regulatory run has not yet been built.

The situation mirrors the lead-up to the 2008 money market crisis, where the systemic impact of a single fund "breaking the buck" was not fully appreciated until after the event. The next bank run may not be slowed by wire transfer queues; it may settle on-chain before the bank’s risk team receives the first alert.

This article is for informational purposes only and does not constitute investment advice.