According to the minutes from a meeting held on October 30, the U.S. Department of the Treasury has noted a growing interest in short-term government bonds, specifically Treasury bills, due to the increasing popularity of stablecoins. During a session on October 29, the Treasury’s Borrowing Advisory Committee discussed the implications of stablecoin adoption and the potential for tokenizing Treasury bills. One committee member proposed establishing a permissioned blockchain specifically for T-bills, as documented in the minutes.
These remarks highlight a developing willingness among U.S. government representatives to explore the integration of blockchain technology into the financial system in a significant way. One committee member remarked, “Given that a substantial portion of stablecoin collateral is believed to consist of Treasury bills or Treasury-backed repurchase agreements, the rise in stablecoins has likely contributed to a slight uptick in demand for short-term Treasury securities.”
The committee acknowledged that the tokenization of T-bills “could lead to enhancements in operations and spur innovation within the Treasury market,” although it may also introduce risks to financial stability. Another member pointed out that “implementing tokenization in the Treasury market would probably necessitate a privately managed and permissioned blockchain overseen by a reliable government authority.”
Stablecoins, which are digital tokens linked to the value of the U.S. dollar, are quickly becoming fundamental to trading and payment systems. As of 2024, the total market capitalization of stablecoins has reached unprecedented levels, nearing $180 billion, according to CoinMarketCap. Among these, Tether (USDT) stands out with a market cap of $120 billion, while Circle’s USD Coin (USDC) follows as a distant second at approximately $35 billion.
Furthermore, tokenized real-world assets (RWAs), ranging from Treasury securities to various artworks, represent a significant global market opportunity estimated at $30 trillion. Colin Butler, the global head of institutional capital at Polygon, shared these insights with Cointelegraph in August. The demand for products that tokenize Treasury bills and other highly liquid yield-generating assets is rapidly increasing.
In terms of assets under management (AUM), some of the largest players in this space include the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and the Franklin OnChain US Government Money Fund (FOBXX), boasting AUM figures of approximately $530 million and $410 million, respectively.