Ethereum News Today: ISO 20022 Bridges Blockchain and Banks, Paving $100T Market

UBS and Chainlink have executed the first onchain tokenized fund redemption in a market poised to reach $100 trillion, marking a pivotal advancement in the integration of blockchain technology with traditional finance. The milestone, achieved through a pilot project leveraging ISO 20022 messaging standards, demonstrates how banks and blockchain networks can interoperate to streamline settlement processes for real-world assets (RWAs). This development follows a surge in tokenized U.S. Treasuries, which now command a $8.6 billion market capitalization, according to Cointelegraph research.

The pilot, conducted in collaboration with Swift and UBS Tokenize, enabled subscriptions and redemptions for a tokenized fund using standardized ISO 20022 messages-a format widely adopted in traditional securities and payments settlements. This approach eliminates the need for custom integrations, allowing custodians and fund administrators to process tokenized assets through existing workflows. "The test proved that the same message format banks use today can now trigger smart-contract actions on a blockchain," said a Cointelegraph report, underscoring the step toward interoperability.

Tokenized money-market funds (MMFs), which pool cash into short-term U.S. government securities, are increasingly serving as collateral in trading, credit, and repo markets. BlackRock's BUIDL, the largest tokenized MMF, now holds $2.85 billion, followed by Circle's USYC and Franklin Templeton's BENJI with $866 million and $865 million, respectively. Institutional adoption is accelerating, with exchanges like Deribit and Bybit accepting tokenized Treasuries as collateral, while DBS Bank in Singapore is piloting tokenized funds for repo transactions.

Despite growth, challenges persist. Regulatory constraints limit most tokenized funds to Qualified Purchasers, excluding retail investors, while liquidity constraints and fixed redemption schedules mirror traditional fund mechanics. Exchanges also apply discounts to tokenized assets due to lower liquidity compared to conventional Treasuries. For example, Deribit reduces margin requirements by 10% for tokenized collateral.

The market's trajectory has drawn bullish projections. Standard Chartered estimates the tokenization sector could reach $2 trillion by 2028, with Ethereum dominating due to its established infrastructure and reliability. The bank highlighted tokenized MMFs and listed equities as key drivers, each projected to represent $750 billion of the total. Meanwhile, Ethereum's dominance in hosting 75% of tokenized RWAs and 60% of global stablecoins underscores its role as the backbone of this evolution.

Debate continues around Ethereum's design choices, with Vitalik Buterin calling for the removal of a feature he considers unfriendly to zero-knowledge proofs, illustrating ongoing discussion about the network's future direction.

Tokenized Treasuries cross $8.6B as banks and exchanges push collateral use