What operational secrets and growth pains are hidden in this $7.4 billion digital game?
Written by: @100y_eth
Compiled by: Saoirse, Foresight News
Translator's note: In the wave of Real-World Assets (RWA), U.S. government bonds are undoubtedly one of the most dazzling existences, with high activity in tokenization. Behind this is the combination of its extremely high liquidity, stability, relatively high yield, expanding institutional participation, and ease of tokenization.
Perhaps you may wonder whether such tokenization involves complex legal mechanisms? In fact, it does not; its implementation relies on transfer agents responsible for managing the official shareholder register, operating on a blockchain instead of a traditional internal database.
To more clearly analyze the main government bond tokens in the U.S., this article constructs three analysis frameworks: a token overview covering protocol introductions, issuance volumes, etc., the regulatory framework and issuance structure, and on-chain application scenarios. It is noteworthy that since U.S. government bond tokens are considered digital securities, they must comply with securities laws and related regulations, which significantly impact their issuance volume, number of holders, on-chain application scenarios, etc. These seemingly unrelated factors actually have a dynamic relationship with mutual interactions. At the same time, contrary to common perception, U.S. government bond tokens also have many limitations. Next, let us delve into the development and future of this field.
Tokenization of Everything
"Every stock, every bond, every fund, every asset can be tokenized."
—— Larry Fink, CEO of BlackRock
Since the passage of the U.S. (GENIUS Act), global attention on stablecoins has surged, and South Korea is no exception. But is stablecoin truly the endpoint of blockchain finance?
Stablecoins, as the name suggests, are tokens pegged to fiat currencies on public blockchains. Essentially, they remain currency and must find application scenarios. As discussed in the (Hashed Open Research x 4Pillars Stablecoin Report), stablecoins can be used in multiple fields such as remittances, payments, and settlements. However, the currently hotly debated area as the 'ultimate release point of stablecoin potential' is Real-World Assets (RWA).
RWA (Real-World Assets) refers to tangible assets that circulate on the blockchain in the form of digital tokens. In the blockchain industry, RWA typically refers specifically to traditional financial assets such as commodities, stocks, bonds, and real estate.
Why has RWA become a focal point after stablecoins? Because blockchain can not only change the form of currency but also has the potential to reshape the underlying architecture of traditional financial markets.
Today's traditional financial markets still rely on extremely outdated infrastructures. Although fintech companies have optimized the front-end experience for retail users by improving the accessibility of financial products, the back-end operational model remains stuck in the past half-century.
Taking the U.S. stock and bond trading market as an example, its current structure originates from the reforms of the 1970s following the 'paperwork crisis' in the late 1960s: (Securities Investor Protection Act) and the securities law amendment were introduced successively, leading to the establishment of institutions such as the Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC). This complex system has been in operation for over 50 years, continually facing issues such as intermediary redundancy, settlement delays, insufficient transparency, and high regulatory costs.
Blockchain is expected to fundamentally revolutionize this situation, creating a more efficient and transparent market system: by upgrading the financial market back-end through blockchain, it can enable instant settlement, smart contract-driven programmable finance, direct ownership without intermediaries, higher transparency, lower costs, and fragmented investments.
Because of this, many public institutions, financial institutions, and enterprises are actively promoting the blockchain tokenization of financial assets. For example:
Robinhood plans to support stock trading through its own blockchain network and has submitted a proposal to the U.S. SEC calling for the establishment of a federal regulatory framework for RWA tokenization;
BlackRock partnered with Securitize to issue a tokenized money market fund BUIDL with a scale of $2.4 billion;
SEC Chairman Paul Atkins publicly supports stock tokens, and the SEC's internal cryptocurrency working group has formalized regular meetings and roundtable discussions related to RWA.
(Source: rwa.xyz)
Setting aside the hype, the growth of the RWA market has been rapid. As of August 23, 2025, the total issued RWA has reached $26.5 billion, an increase of 112% from a year ago, 253% from two years ago, and 783% from three years ago. The types of financial assets being tokenized are diverse, with U.S. government bonds and private credit growing the fastest, followed by commodities, institutional funds, and stocks.
U.S. Government Bonds
(Source: rwa.xyz)
In the RWA market, the tokenization of U.S. government bonds is the most active. As of August 23, 2025, the U.S. bond RWA market size is approximately $7.4 billion, a 370% increase from last year, showing explosive growth.
It is noteworthy that both traditional financial institutions and decentralized finance (DeFi) platforms are actively laying out in this field. For example, BlackRock's BUIDL fund leads with $2.4 billion in assets; DeFi protocols like Ondo have launched funds such as OUSG based on bond-backed RWA tokens like BUIDL and WTGXX, maintaining a scale of around $700 million.
Why can U.S. government bonds become the most active and largest area for tokenization in the RWA market? The reasons are as follows:
Liquidity and stability: U.S. Treasury bonds have the deepest liquidity globally and are considered 'safe assets' with no default risk, boasting strong credibility;
Global accessibility enhancement: Tokenization lowers investment thresholds, allowing overseas investors to participate more conveniently in U.S. Treasury bond investments;
Expanded institutional participation: Leading institutions such as BlackRock, Franklin Templeton, and WisdomTree are driving the market by issuing tokenized money market funds and treasury products, providing investors with trust backing;
Stable and substantial returns: U.S. Treasury bond yields are stable and relatively high, averaging around 4%;
Low tokenization difficulty: Although there is currently no dedicated regulatory framework for RWA, the basic tokenization operations of U.S. Treasury bonds are feasible within the existing regulatory framework.
U.S. Government Bond Tokenization Process
How do U.S. Treasury bonds achieve tokenization on-chain? It seems to involve complex legal and regulatory mechanisms but is actually very simple to operate under existing securities laws (different tokens have varying issuance structures; this section only introduces representative methods).
It must be clarified: the currently issued 'RWA tokens based on U.S. Treasury bonds' are not directly tokenizing the bonds themselves, but rather tokenizing funds or money market funds based on U.S. Treasury bonds.
In the traditional model, public asset management funds such as U.S. Treasury bond funds must designate a 'transfer agent' registered with the SEC—these financial institutions or service companies are entrusted by securities issuers to manage investors' fund ownership records. From a legal perspective, the transfer agent is central to securities record and ownership management, bearing the official responsibility of maintaining the fund investors' shares.
The tokenization process of U.S. Treasury bond funds is very straightforward: tokens representing fund shares are issued on-chain, and transfer agents conduct internal operations via blockchain systems to manage the official shareholder register. In simple terms, it is just transferring the database that maintains shareholder records from a private system to a blockchain.
Of course, due to the lack of a clear regulatory framework for RWA in the U.S., holding tokens currently cannot guarantee 100% legally protected ownership of fund shares. However, in practice, transfer agents manage fund shares based on on-chain token ownership records, so under normal circumstances without hacking or unforeseen events, token ownership can generally indirectly safeguard fund share rights.
Main Protocols and RWA Analysis Framework
Tokenization based on U.S. Treasury bond funds is the most active area in the RWA industry, leading many protocols to issue related RWA tokens. This article analyzes 12 major tokens from three dimensions:
(1) Token Overview
Including a brief introduction to the issuing protocol, issuance volume, number of holders, minimum investment amount, and management fees. Due to differences in fund structure, tokenization methods, and on-chain utility among various protocols, analyzing the issuing protocols can quickly grasp the core characteristics of the tokens.
Issuance Volume: Reflects the scale of the fund and market acceptance;
Number of Holders: Indicates the legal structure of the fund and on-chain application scenarios. If the number of holders is low, it may be because securities laws require investors to be high-net-worth accredited investors or qualified purchasers; these tokens are usually limited to whitelisted wallets for holding, transferring, or trading, making them difficult to apply widely in DeFi protocols.
(2) Regulatory Framework and Issuance Structure
Clarify the national regulatory rules that the fund follows and outline the various entities involved in fund management.
After analyzing 12 types of RWA tokens based on U.S. Treasury bond funds, their regulatory frameworks can be divided into the following categories based on the fund's registration location and fundraising scope:
(Rule 506(c)) + (Investment Company Act Section 3(c)(7))
The most widely used framework. (Rule 506(c)) allows for public fundraising from an unspecified number of investors but requires all investors to be 'accredited investors', with the issuer needing to strictly verify identity through tax records, asset proof, and other documents; (Investment Company Act Section 3(c)(7)) exempts private funds from SEC registration requirements, but all investors must be 'qualified purchasers' and the fund must maintain a private structure. The combination of both can broaden the investor base while avoiding regulatory burdens such as registration and disclosure, applicable to qualified U.S. and foreign funds. Representatives include BUIDL, OUSG, USTB, VBILL, etc.
(Section 2a-7 of the Investment Company Act of 1940)
A framework for SEC-registered money market funds requires that funds maintain stable value, invest only in short-term high-credit instruments, and ensure high liquidity. Unlike the above framework, it allows public issuance to ordinary investors, so the minimum investment amount for such tokens is low, making it more accessible. Representatives include WTGXX, BENJI.
(Cayman Islands Mutual Fund Law)
Applicable to open-ended mutual funds registered in the Cayman Islands (flexible issuance and redemption), requiring a minimum initial investment of no less than $100,000. The representative is USYC.
British Virgin Islands (2010 Securities and Investment Business Act) (Professional Funds)
The core law governing registered investment funds in the British Virgin Islands, 'professional funds' are aimed at professional investors (not the public), with a minimum initial investment of $100,000. Note: If raising funds from U.S. investors, additional compliance with Rule 506(c) is required. Representatives include JTRSY, TBILL.
Others
Applicable local rules vary based on the fund's registration location. For example: the USTBL issued by French Spiko follows the EU (Directive on the Collection of Transferable Securities) and (Regulation on Money Market Funds); the ULTRA issued by Singapore's Libeara follows (Securities and Futures Act of 2001).
The fund issuance structure involves 7 core participants:
Fund Entity: The legal entity that gathers investor funds, often adopting offshore structures such as U.S. trusts, British Virgin Islands, or Cayman Islands;
Fund Manager: The entity responsible for establishing the fund and overseeing overall operations;
Investment Manager: The entity that actually makes investment decisions and manages the portfolio, which may be the same entity as the fund manager or exist independently;
Fund Administrator: Responsible for accounting, net asset value calculations, investor report preparation, and other back-office operations;
Custodian: Safely holds bonds, cash, and other fund assets;
Transfer Agent: Manages the shareholder register, legally records and maintains ownership of the fund or shares;
Auditor: An independent accounting firm responsible for external audits of the fund's accounts and financial statements, which is key to investor protection.
(3) On-chain Application Scenarios
One of the greatest values of bond fund tokenization is its potential application in the on-chain ecosystem. Despite regulatory compliance and whitelist restrictions, bond fund tokens are difficult to use directly in DeFi, but some protocols have explored indirect applications: for example, DeFi protocols like Ethena and Ondo use BUIDL as collateral to issue stablecoins or include it in investment portfolios, providing retail users with indirect participation channels. In fact, BUIDL has rapidly expanded its issuance by integrating with mainstream DeFi protocols, becoming the largest bond-like token.
Cross-chain solutions are also crucial for enhancing on-chain utility. Most bond fund tokens are issued not only on a single network but also cover multiple chains to increase investor choices—although their liquidity does not need to reach stablecoin levels, cross-chain functionality can improve user experience and achieve seamless transfer of tokens across multiple networks.
Insights
After analyzing 12 major RWA tokens based on U.S. Treasury bond funds, I found the following insights and limitations:
On-chain utility is limited: RWA tokens cannot be freely used just because they are tokenized; they essentially remain digital securities and must comply with the regulatory framework of the real world. All bond fund tokens can only be held, transferred, or traded between whitelisted wallets that have completed KYC, which creates a barrier that makes direct application in permissionless DeFi difficult.
Fewer holders: Due to regulatory thresholds, the number of holders of bond fund tokens is generally low. Currency market funds aimed at retail investors, such as WTGXX and BENJI, have relatively more holders, but most funds require investors to be accredited investors, qualified purchasers, or professional investors, limiting the eligible group and making it difficult for the number of holders to exceed double digits.
Mainly B2B applications on-chain: For the reasons mentioned above, bond fund tokens currently have no direct DeFi applications aimed at retail users, and are more commonly adopted by large DeFi protocols. For example, Omni Network uses Superstate's USTB for treasury management, while Ethena issues USDtb stablecoins using BUIDL as collateral, allowing retail users to benefit indirectly.
Regulatory dispersion and lack of standards: The issuers of bond fund tokens are registered in different countries, following different regulatory frameworks. For instance, while BUIDL, BENJI, TBILL, and USTBL are all bond fund tokens, they belong to different regulatory systems, leading to significant differences in investor qualifications, minimum investment amounts, and application scenarios. This fragmentation increases the difficulty for investors to understand, and the lack of a unified standard makes it challenging for DeFi protocols to achieve interoperability, limiting on-chain utility.
Lack of a dedicated RWA regulatory framework: Currently, there are no clear rules for RWA. Although transfer agents have recorded shareholder registers on the blockchain, the on-chain token ownership has yet to be legally recognized as equivalent to real-world securities ownership. Specific regulations need to be enacted to connect on-chain ownership with real legal ownership.
Insufficient application of cross-chain solutions: Although almost all bond fund tokens support multi-chain issuance, there are very few actual cross-chain solutions implemented. Further promotion of cross-chain technology is needed to avoid liquidity dispersion and enhance user experience.