BlackRock's Tokenized Treasury Fund Surpasses Franklin Templeton's in Nascent Market

BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) has overtaken Franklin Templeton's OnChain U.S. Government Money Fund (FOBXX) to become the world's largest tokenized treasury fund, reaching a market cap of $1.3 billion in the nascent $160 billion tokenized treasury market, according to data from rwa.xyz.

Launched just six weeks ago in partnership with Securitize Markets, BlackRock's BUIDL fund has quickly captured the market's attention, amassing $375 million in assets under management (AUM). In comparison, Franklin Templeton's FOBXX, which represents shares in their U.S. Government Money Fund that can be minted on the Stellar and Polygon blockchains, currently holds $368 million in AUM.

BUIDL's rapid ascent is attributed to a $70 million inflow last week, including $50 million from Ondo Finance's OUSG token product. During the same period, FOBXX experienced a 3.7% decrease in its AUM.

Why this matters: The growth of tokenized treasury funds like BUIDL and FOBXX highlights the increasing adoption of blockchain technology within mainstream financial services. As more traditional financial giants enter the space, the tokenized asset market is projected to expand rapidly, potentially reaching $16 trillion by 2030.

The success of BUIDL signals a paradigm shift in how traditional financial institutions perceive and interact with blockchain technology, marking a new period of innovation and disruption within the financial services industry. BlackRock CEO Larry Fink believes tokenization could improve the efficiency of capital markets, and the firm's entry into the tokenized treasury market appears to be accelerating the growth of the category.

While investor demand for these tokenized products remains in its early stages, the existing demand for U.S. Treasurys from the $140 billion stablecoin market is expected to drive increased adoption of tokenized government securities. Experts predict that tokenized government securities will increase their dominance from 1% currently to over 10% in the years to come.

Key Takeaways

• BlackRock's BUIDL overtakes Franklin Templeton's FOBXX as largest tokenized treasury fund.
• BUIDL reaches $1.3B market cap, amassing $375M AUM in 6 weeks, surpassing FOBXX's $368M.
• BUIDL's rapid growth driven by $70M inflow, including $50M from Ondo Finance's OUSG token.
• Tokenized treasury funds signal mainstream adoption of blockchain in financial services.
• Tokenized government securities expected to increase from 1% to over 10% of market.