Tokenized U.S. Treasury Bonds Increase Market Risk Vectors
Tokenized U.S. public debt used as collateral in leveraged operations exposes crypto markets to greater geopolitical and liquidity risks.
The growing use of tokenized U.S. Treasury bond products with yield as collateral for leveraged crypto trading creates new pathways for risk transmission between markets, increasing the likelihood of cascading effects in decentralized finance (DeFi) protocols.
Tokenization is the process of converting real-world assets into digital tokens on a blockchain. In the case of U.S. Treasury bonds, these tokens represent on-chain rights over government debt, offering a comparable alternative to shares in money market funds.