Tokenized Treasuries Surge, Yet Remain a Small Fraction of Stablecoin Market

Tokenized U.S. Treasuries have experienced significant growth over the past year but still account for only a small portion of the stablecoin market, suggesting there is untapped potential for further expansion.

Tokenized Treasuries have surged over 500% year-over-year (YoY), rising from $800 million to approximately $5.2 billion, data platform RWA.xyz shows. This is driven by increasing demand for blockchain-based real-world assets (RWAs), according to a new report by Centrifuge and Keyrock.

Just over the last two weeks, the asset class recorded a $1 billion increase driven by strong inflows into market-leading offerings from BlackRock and Securitize. However, this still represents just 2% of the stablecoin market, the report noted.

“While Treasuries still represent a small portion of stablecoin TVL, the YoY growth is increasingly impressive when compared to stablecoin YoY growth of only 59%,” Bhaji Illuminati, CEO at Centrifuge, told The Defiant. “Stablecoins have had a much longer time to see steady growth after coming to market in 2020, whereas Treasuries only started growing in 2023 when yields rapidly increased from near zero to over 5% while DeFi lending rates shrank.”

Stablecoins Vs. Tokenized Treasuries

One of the major distinctions between stablecoins and tokenized Treasuries lies in how yield is managed, Illuminati explained. While stablecoin issuers like Tether benefit from earning yield on reserves, the real question becomes if – and how – that yield gets passed to users.

“Once you pass yield to the end user, you’re entering the realm of regulated investment products, which triggers entirely different compliance and disclosure obligations,” Illuminati said. “That’s one of the biggest barriers to broader adoption: the regulatory uncertainty.”

She added that not all users require yield, making it an important design decision. “Non–interest bearing stablecoins will continue to serve as critical liquidity and transactional rails across DeFi and global payment flows,” Illuminati said. “So the future isn’t one versus the other. Tokenized Treasuries and stablecoins serve different roles.”

Regulatory Barriers

The biggest challenge to the widespread adoption of both stablecoins and tokenized Treasuries has been the lack of clear and proactive regulatory guidelines, Illuminati explained.

“Companies have been hesitant to innovate due to a regulatory environment defined more by enforcement than by established rules,” she said. “True regulatory clarity will provide the guardrails needed to build durable, compliant products that can scale sustainably.”

She pointed out that while stablecoin legislation is making progress, tokenized Treasuries already operate within well-established securities laws. However, the challenge lies in regulators' reluctance or inability to approve new structures.

“The recent approval of Figure’s YLDS product, which was filed in 2023 and only just received the green light, is a perfect example,” she said. “It shows regulators are starting to engage more seriously and that well-designed, compliant tokenized products can move forward.”

Illuminati believes this finally clears the way for more innovation and institutional participation from issuers and investors who have been waiting for a signal that the space is ready for mainstream adoption.