Tokenized U.S. Treasuries on Public Blockchains: A Growing Market

As of September 12, 2025, tokenized U.S. Treasuries on public blockchains have amassed a formidable $7.42 billion, illustrating the growing interest in blockchain-based financial instruments. This development is significantly driven by substantial holdings on Ethereum, with much of it tracked by RWA.xyz. One noteworthy entry in this sector is Fidelity’s new OnChain share class, which has been designed specifically for institutional investors. With the launch of the Fidelity Treasury Digital Fund’s OnChain Class, tracked on Ethereum as the Fidelity Digital Interest Token, the fund reaches approximately $203.7 million in outstanding value, backed by Bank of New York Mellon as custodian and involving two on-chain holders.

The structure of Fidelity’s OnChain class is notable. It maintains a dual ownership record where the transfer agent holds the official share register in book-entry form while also recording ownership on a public blockchain. According to filings and reports from RWA.xyz, this fund predominantly invests at least 99.5% of its assets in cash and U.S. Treasuries, adhering strictly to Rule 2a-7. This meticulous investment approach is critical for attracting institutional players who prioritize stability and compliance.

Tracking the Growth of Tokenized Funds

Various funds are also rapidly accumulating sizeable amounts, indicating a growing liquidity landscape in the tokenized market. Notably, BlackRock’s USD Institutional Digital Liquidity Fund stands at around $2.20 billion, whereas WisdomTree’s Government Money Market Digital Fund has seen its assets grow by approximately 40% over the past month, reaching around $832.3 million. Other significant players include Franklin Templeton’s on-chain U.S. government money fund, valued at about $752.3 million, and Ondo’s short-term government bond fund, which is approximately $729.6 million. These products are not limited to Ethereum; they also support other rollup networks, such as Base and Optimism, enhancing their operational flexibility.

To achieve the ambitious target of surpassing $10 billion in tokenized Treasuries by the year-end, the market needs to accumulate about $2.58 billion in net additions. This translates to roughly $700 million in net inflows monthly through December. Interestingly, the vast pool of traditional cash relative to this target presents a unique opportunity for tokenized treasury instruments. The total assets of U.S. money market funds were reported at $7.26 trillion, suggesting that even minor reallocations towards tokenized Treasury funds could substantially increase their market capitalization.

Yield and On-Chain Logistics

The interest in tokenized Treasuries is also driven by attractive yield backgrounds and efficient on-chain logistics. As of September 10, the three-month Treasury bill rates stood at 3.94%. This yield not only shapes income accrual across tokenized funds but also stimulates demand for "on-chain dollars with yield." Post-Ethereum’s Dencun upgrade, studies have shown improved data availability fees for rollups, significantly reducing friction for minting, transferring, and redeeming on Layer 2 (L2) solutions. This optimization enables better circulation of RWA tokens, making them more accessible.

In addition to yield, how assets are distributed is crucial. Circle’s USDC smart contract off-ramp facilitates near-instant redemptions into stablecoins, adding to the liquidity profile of the market. Improved functionalities like these mean that tokenized cash instruments can effectively serve as both collateral and treasury assets instead of being mere passive holdings. For instance, Circle’s USYC has expanded its use case, providing yield-bearing off-exchange collateral for Binance’s institutional clients, thereby enhancing asset utility within derivatives trading.

Pathway to $10 Billion by Year-End

Looking ahead, several factors can catalyze growth in the tokenized Treasury market. If products surrounding BUIDL, WTGXX, BENJI, OUSG, and USYC grow by an estimated 8% to 10% within the next three months, this could potentially contribute an additional $600 million to $800 million. Furthermore, the introduction of new share classes like Fidelity’s OnChain Class is expected to bolster this growth trajectory. A higher-range outcome that could see the market cap reaching between $10.8 billion to $11.5 billion hinges on attracting new brand entrants or significant mandate allocations, together contributing around $1.0 billion to $1.5 billion.

On the flip side, a lower-range projection around $9.1 billion to $9.6 billion could materialize if front-end yields drift downward or if the minting activity slows down. However, the changing infrastructure offers a solid foundation for future issuance, as evidenced by the growing presence of share classes like Fidelity’s OnChain Class, which keeps ownership records on-chain while conforming to established money market protocols, thereby ensuring risk management.

Network Consolidation and Future Opportunities

The tokenized Treasury landscape is consolidating on Ethereum, as evidenced by RWA.xyz’s listings, highlighting the availability of top financial products on the network. Many of these offerings are also bridging to Layer 2 solutions, which further enhances their operational scope while simultaneously reducing transaction costs. This trend channels greater volume into Ethereum’s settlement layer, even as more transactions migrate towards lower-cost rollups.

Moving forward into December, three pivotal metrics will determine the market’s trajectory: the number of on-chain holders, the net minting trends tracked by RWA.xyz, and the emergence of new collateral and custody solutions. A sustainable monthly minting pace of around $600 million to $800 million is required to achieve the $10 billion milestone on Ethereum by year-end.

Conclusion

In summary, the tokenized U.S. Treasuries market is poised for significant growth, fueled by institutional engagement, robust yield opportunities, and evolving technological frameworks. The confluence of dynamic fund strategies, increased liquidity, and improved on-chain functionalities presents immense potential for reaching and surpassing the $10 billion benchmark by the close of the year. Stakeholders should keep an eye on critical indicators and market developments as they shape the landscape for tokenized financial instruments in the months to come.