Tokenization of US Treasuries and the Rise of 24/7 Capital Markets: How Blockchain Infrastructure is Unlocking Institutional-Grade Collateral Mobility and Liquidity

The financial landscape is undergoing a seismic shift as blockchain technology redefines the architecture of capital markets. At the forefront of this transformation is the tokenization of U.S. Treasuries-a development that is not only enhancing liquidity but also enabling 24/7 trading and instant collateral reuse. By mid-2025, tokenized U.S. Treasury products had surpassed $7.4 billion in issuance, reflecting a surge in institutional demand driven by real-time settlement capabilities and regulatory clarity. This evolution is being powered by blockchain protocols that merge traditional finance (TradFi) with decentralized finance (DeFi), creating a new paradigm for institutional-grade collateral mobility.

The Growth of Tokenized U.S. Treasuries

Tokenized U.S. Treasuries have emerged as a cornerstone of digital finance, with platforms like BlackRock's BUIDL fund capturing $2.38 billion in assets within 15 months. These products offer institutional investors access to high-quality liquid assets (HQLA) with settlement times reduced to T+0, eliminating the inefficiencies of traditional T+2 cycles. By April 2025, tokenized Treasuries had reached $5.75 billion in issuance, a figure that grew to $7.4 billion by mid-year as demand from funds, corporates, and crypto-native treasuries surged. The appeal lies in their ability to free up capital that would otherwise be locked in settlement periods, enabling instant reuse as collateral for lending, derivatives, or other financial activities.

Blockchain Protocols Enabling 24/7 Markets

The backbone of this transformation is blockchain infrastructure, which facilitates continuous trading and atomic settlement. A landmark example is the Canton Network-a collaboration between Digital Asset, Bank of America, Circle, and DTCC-that executed the first fully on-chain financing of U.S. Treasuries (UST) against USDC outside traditional market hours. This transaction, completed on weekends and holidays, demonstrated true 24/7 liquidity, and atomic settlement, where asset and payment transfers occur simultaneously, eliminating counterparty risk.

Ethereum and its layer-2 solutions (e.g., Arbitrum, Optimism) dominate 72% of the tokenized Treasury market, offering low-cost, high-throughput transactions. Meanwhile, platforms like JPMorgan's Onyx network process $2 billion daily in internal transfers, showcasing blockchain's scalability for institutional use cases. The Depository Trust Company (DTC), a DTCC subsidiary, has also received SEC approval to tokenize stocks and Treasuries, further bridging traditional and digital finance.

Technical Innovations Driving Collateral Mobility

The technical architecture underpinning tokenized Treasuries includes smart contracts that automate compliance, dividend distributions, and transfer restrictions. For instance, tokenized Treasuries held in custody by institutions like Bank of New York Mellon are represented by digital tokens with embedded KYC/AML checks, ensuring only verified addresses can transact. This programmability extends to yield distribution, where newly minted tokens are used to reward holders, aligning with DeFi protocols that require stable valuations.

Cross-chain interoperability, facilitated by protocols like Wormhole, allows tokenized Treasuries to move seamlessly across Ethereum, Solana, and other networks, optimizing for cost and speed. DTCC's Great Collateral Experiment further highlights blockchain's potential to optimize collateral reuse, enabling tokens to be pledged, rehypothecated, or used for margin requirements in real time. These innovations address a critical pain point in traditional markets: the inability to dynamically allocate collateral across multiple jurisdictions and asset classes.

Regulatory Clarity and Institutional Adoption

Regulatory frameworks have played a pivotal role in legitimizing tokenized Treasuries. The EU's Markets in Crypto-Assets (MiCA) regulation and the U.S. GENIUS Act have provided clarity on tokenized assets and stablecoins, reducing legal uncertainty for institutions. The SEC's authorization of DTC's tokenization efforts has further accelerated adoption, with asset managers like Franklin Templeton and Fidelity launching tokenized funds at scale. This regulatory tailwind has enabled platforms to operate with institutional-grade security while complying with global standards.

Future Implications for Capital Markets

The rise of tokenized Treasuries signals a broader shift toward 24/7 liquidity access and programmable finance. By 2025, tokenized U.S. Treasuries and money market funds had attracted over $5.7 billion in assets under management, with platforms like Ant International's Whale network enabling intragroup liquidity management through tokenized deposits. These developments are not just improving operational efficiency but redefining financial infrastructure itself, enabling seamless integration between TradFi and DeFi ecosystems.

For investors, the implications are clear: blockchain-enabled tokenization is unlocking a new era of capital markets where liquidity is no longer constrained by time zones or settlement cycles. As institutional-grade platforms continue to mature, tokenized Treasuries will become a critical component of global financial infrastructure, offering unparalleled flexibility, security, and efficiency.