Tokenized US Treasuries are growing, but who is buying them?

The US government borrows through Treasury securities, yet most of the geolocated value of tokenized Treasuries sits outside the country. What draws investors to blockchain-based access, and what do they actually own?

TL;DR

• Tokenized US Treasuries reached $15.42 billion by July 1, 2026, up 125% in a year, per Chainalysis.
• Most geolocated value sits outside the US, led by countries few would guess.
• Tokenized Treasuries offer yields of roughly 3.5% to 3.9%, with some products allowing around-the-clock on-chain transfers and lower minimum investments.
• A tokenized Treasury is usually a fund share or note, not a Treasury security, and products differ in structure and in how they pay yield.
• Holders tend to hold the tokens rather than use them as collateral. Lending against tokenized Treasuries contracted 23% over the period studied by Chainalysis.

What tokenized US Treasuries are, and what investors own

A tokenized US Treasury is a digital representation of government debt, such as T-bills or other short-dated securities. The token lives on a public or private blockchain, while the underlying assets are generally held off-chain through a fund or custody structure.

The token represents rights defined by the product's legal structure. It may represent a fund interest, a note backed by underlying assets or another contractual claim. Holders can transfer or use the tokens through supported blockchain infrastructure, subject to product restrictions.

The underlying assets range from short-dated T-bills to Treasury-backed money market instruments, and the legal structure varies by issuer. Returns reflect income from the portfolio, less fees and other expenses. They are not fixed or guaranteed.

Tokenization process, simplified. Source: Adam Smith

Tokenized Treasury ≠ Treasury security

A token that represents a fund interest is not the same as holding a US Treasury directly. Depending on the product, investors may hold fund shares, notes or another contractual claim, with the rights and counterparty exposure that come with it.

Products also differ in how they pass yield to holders:

• Distributing (rebasing). The token price stays fixed and the holder’s balance grows as new tokens are minted into their wallet.
• Accumulating. The balance stays fixed and the token’s price (its net asset value, or NAV) rises with the underlying yield. The holder realizes the gain on sale or redemption.

Example: BlackRock's BUIDL

BUIDL is open to qualified institutional investors and has paid an average APY of 3.6% to 3.9%, depending on short-term rates. Each token is designed to hold a stable NAV of $1.00. Besides T-bills, the fund holds cash and overnight tri-party repurchase agreements (repos).

Interest accrues daily and is paid monthly as additional tokens. An investor holding 1,000 BUIDL sees the balance grow over time while each token stays worth $1.00.

How the BUIDL fund works. Source: Gate.io

Example: Ondo’s Treasury-linked products

Ondo wraps institutional-grade assets instead of managing the underlying securities directly, and its products differ by audience: some target institutional US investors, others global retail users. Both products below accumulate:

• USDY (US Dollar Yield) is a tokenized note backed by short-term Treasuries and bank demand deposits. It yields about 3.75% APY at press time, while RWA.xyz shows a 3.68% seven-day APY.
• OUSG (Short-Term US Government Treasuries) is an institutional fund that allocates capital to other large tokenized funds, including BUIDL. Its current yield is 3.67% APY.

USDY and OUSG as key ONDO products. Source: Altrady

Why buy Treasuries on-chain

Tokenized Treasuries offer more than yield. They pair exposure to short-term US government debt with blockchain settlement and a route into crypto markets. Leading products currently yield roughly 3.5% to 3.9%, depending on the product and the day.

• Faster settlement. Tokens can transfer between eligible wallets outside conventional banking hours, with on-chain transfers often settling within minutes or less. Traditional Treasury trades generally settle on a T+1 basis. But token transfers are not the same as fund subscriptions or redemptions, which may still depend on the issuer and its banking arrangements.
• Lower barriers. Chainalysis says tokenization lowers minimum position sizes and removes the need for a US brokerage relationship, so a retail holder in Lisbon or Singapore can buy what is normally a wholesale instrument. KYC and AML checks can be built into the token’s transfer rules, though some products still restrict who can hold them.
• Collateral use. Holders with idle stablecoins can move into yield-bearing debt and, in some cases, pledge the tokens in lending or derivatives protocols. Chainalysis data suggests this is used less than the pitch implies, a point we return to below.

Interoperability of tokenised T-bills. Source: Tokeny

The value of these benefits depends on who is buying and what rights the token actually confers.

Who and where the buyers are

Tokenized US Treasuries more than doubled in a year, from $6.86 billion to $15.42 billion by July 1, 2026, according to Chainalysis. Yet when the firm looked at where holders are located, the United States ranked behind three countries that rarely come up in talk of Treasury demand.

Among the value Chainalysis could geolocate, Italy leads with 29.9%, followed by Portugal at 18.8% and Singapore at 18.2%. Together they hold nearly 67%. US holders account for 10.5%, which ranks fourth.

Note: These figures describe where holders are located. The issuers, fund operators and custodians behind the products can sit in other jurisdictions again, so location is a clue to who is buying, not a full answer. Buyers generally fall into three categories described below.

Crypto-native investors

Tokenized Treasuries let crypto investors earn sovereign-linked yield without moving capital back into traditional financial infrastructure. The appeal spans crypto-native funds, hedge funds, DAOs, protocol treasuries and stablecoin issuers. Yields follow Fed policy: they ran at roughly 4% to 5% in recent years and sit near 3.5% to 3.9% now. The main use cases are:

• Cutting cash drag. Idle stablecoins or cash buffers can move into yield-bearing, Treasury-backed products.
• Managing capital on-chain. Tokens can settle in minutes rather than the next business day or longer, so a DAO or protocol treasury can sweep spare cash into a fund and convert it back when expenses come due.
• DeFi collateral. Some products, such as VanEck’s VBILL, can serve as collateral in lending markets or as margin on derivatives venues, letting holders borrow against the position without selling it. Eligibility depends on the product and the platform.
• Stablecoin reserves. Issuers, particularly smaller ones, can hold tokenized short-term government debt as reserves, which makes the backing easier to inspect on-chain.

Tokenized money market funds vs. stablecoins. Source: American Banker

The collateral pitch may be less used than it sounds. Chainalysis finds that holders tend to hold tokenized Treasuries rather than post them, and Treasury lending contracted 23% over the period. The core trade-off is yield against liquidity: tokens transfer instantly, but redeeming into cash depends on the issuer’s processing windows and banking hours.

Investors outside the US

Investors outside the US account for most of the geolocated value. For some, the appeal is access to dollar-denominated yield without needing a US brokerage account.

• Dollar access outside banking hours. Traditional cross-border dollar transfers can be delayed by bank cut-off times, correspondent banking arrangements and public holidays. On-chain tokens can move outside those windows, allowing eligible holders to transfer assets around the clock. However, converting them into bank deposits or redeeming them for cash may still require conventional banking services.
• Easier entry. Chainalysis says tokenization removes the need for a US brokerage relationship and lowers minimum positions. Where a product allows it, the tokens can also plug into DeFi lending and cross-border treasury tools.

Blockchain rails ≠ frictionless access

Smart contracts do cut some costs, mainly in record-keeping, reconciliation and fractional transfers. Several frictions remain:

• Off-chain bottlenecks. Redemptions are often tied to the banking hours of the underlying fund, and on- and off-ramp limits apply. Moving from local currency into dollar stablecoins such as USDC or USDT, or into a fiat-backed tokenized fund, adds FX spreads, ramp fees and slippage that eat into yield.
• Gated access. Many products are not permissionless. They require KYC/AML checks and limit buyers to non-US or qualified and accredited purchasers, through exemptions such as Regulation S or allowlists run by tokenization agents like Securitize. Circle’s USYC, for example, is available only to non-US persons.
• Regulations: Foreign regulators are carefully watching how tokenized US Treasuries impact their own economies, with concerns including currency replacement and capital flight. For instance, Chinese regulators officially banned all onshore real-world asset (RWA) tokenization activities in February 2026.
• Tax headaches: Buying a tokenized version is legally very different from buying a standard US government bond. This change creates complex tax hurdles. For example, the Indian Income Tax Department treats a tokenized US Treasury like a speculative memecoin, which complicates compliance for entities trying to keep their capital working on-chain. 

Institutions

Institutions treat tokenization less as a yield play than as a way to make assets they already hold more mobile. The documented uses are narrower than the pitch, so it helps to separate what exists from what is promised.

The clearest example is JPMorgan’s Tokenized Collateral Network (TCN). In its first live transaction, in October 2023, BlackRock turned shares in a money market fund into tokens and transferred them to Barclays as collateral for an over-the-counter derivatives trade.

JPMorgan said the collateral moved almost instantly, rather than over the course of a day. TCN is a closed, permissioned network, and the tokens represent ownership interests in the fund shares, not the securities themselves.

Documented today

• Pledging tokenized money market fund shares as collateral on permissioned networks.
• Holding tokenized funds as cash reserves, mainly at crypto businesses and digital-asset treasuries.
• Posting tokenized funds as exchange collateral. Binance accepts Circle’s USYC off-exchange for institutional clients.

Still developing

• Automated intraday collateral substitution across public and private chains.
• Round-the-clock cash sweeping and programmable payments.
• Atomic cross-border settlement between legacy rails and blockchain networks.

Yield ≠ utility

Which drives institutional demand? Yield brings the capital in: short-term rates are attractive, and crypto firms need somewhere to park dollars. The case for utility is that the same assets can be pledged and moved faster than a standard T-bill position. So far the evidence leans toward yield. Chainalysis finds holders tend to hold tokenized Treasuries rather than post them, and lending against them fell 23%.

What the growth figures do not tell us

The market's expansion does not necessarily mean tokenized Treasuries have reached a broad retail audience. A relatively small number of institutional investors can account for substantial value, and geographic data alone cannot establish who the beneficial owners are or what motivates them.

Transferability also does not guarantee liquidity. A token may move between eligible wallets in seconds without a liquid secondary market or immediate redemption at par.

Investors take on risks beyond those of the underlying government debt. The legal claim depends on the product's structure, while custody, issuer operations and redemption arrangements introduce additional points of failure. Treasury-backed funds can also carry liquidity and interest-rate risks, depending on their holdings and structure.

Concentration matters, too. A growing market can remain dependent on a handful of issuers, distribution channels and blockchain networks.

The bigger question is whether tokenization creates new demand for US Treasuries or mainly changes how existing demand is held and transferred. Market growth alone cannot answer that. 

Wider use as collateral and evidence that on-chain settlement delivers practical benefits would provide a clearer indication of whether tokenization is changing how investors use these assets.