Chart of the Week: Stablecoins Were Just the Beginning

Last week, SoFi — an online banking and investing platform used by nearly 15 million people — rolled out its own stablecoin to customers.

That makes it the first U.S. national bank to offer a dollar-backed stablecoin directly to everyday consumers on a public blockchain.

To me, this is a clear sign that digital dollars are moving into the financial mainstream.

But we’re still in the early innings of tokenization.

Stablecoins have shown that money can move across the internet quickly and cheaply.

Now Wall Street is experimenting with something potentially much bigger:

Financial assets that can move that way too.

Stablecoins Were Just the Beginning

The chart below comes from RWA.xyz, which tracks tokenized real-world assets.

In this case, we’re just looking at tokenized U.S. Treasuries.

On June 4, 2022, this entire market held just $1.85 million in assets.

Exactly four years later, it holds more than $15 billion.

Now, I don’t believe this massive jump happened because investors suddenly became fascinated by Treasury bills. After all, they’re simply short-term loans to the U.S. government.

Investors buy Treasury bills because they’re considered safe, liquid and reliable. They’re about as exciting as a beige filing cabinet.

But that’s exactly why I wanted to share this chart with you today.

Because most of the attention given to crypto these days comes from the loudest parts of the market. You’ll often hear about meme coins, NFTs and other speculative projects with names that sound like rejected energy drinks.

But tokenized Treasuries are different.

They take one of the most trusted assets in traditional finance and put it on a blockchain.

That means Treasury-backed assets can now move faster and settle quicker. They can also operate outside of normal banking hours.

To understand why that’s such a big deal, consider stablecoins.

A stablecoin is basically digital cash. It’s designed to hold a steady value, usually one dollar, while moving across blockchain networks.

That makes stablecoins useful for payments, trading and moving money quickly.

And they’re no longer some niche crypto experiment. Over $300 billion worth of stablecoins are now circulating through the financial system.

Source: https://defillama.com/

But stablecoins have one major limitation.

They’re mostly designed to hold value, not grow it. A digital dollar sitting in a stablecoin is still just a dollar.

Treasuries are different because they pay yield.

Imagine a business holding cash in a digital account. With a stablecoin, that money can move quickly. But with a tokenized Treasury, that money can also earn interest while still being useful inside digital financial systems.

That’s why some of the biggest names in finance are moving into the market.

BlackRock launched its BUIDL tokenized Treasury fund in 2024, and it quickly grew into a fund worth billions of dollars. Circle, the company behind the USDC stablecoin, has also expanded into tokenized Treasuries as investors look for ways to earn interest on digital dollars.

This points to the bigger story behind this week’s chart.

Today’s financial system still relies on processes that can take days to move money and assets around. Tokenized Treasuries suggest those systems should eventually become much faster, more flexible and easier to use online.

And once investors start seeing those benefits, you can see why other assets are following the same path.

Investors don’t just want digital money.

They want every financial asset to move at the speed of the internet. That’s why stocks, real estate, private credit and commodities are increasingly being tokenized too.

This doesn’t mean the traditional financial system is going to disappear overnight.

But the direction things are heading is much easier to see now.

Here’s My Take

Four years ago, tokenized Treasuries were basically a rounding error.

Today, they’re a $15 billion market.

That suggests blockchain technology may finally be finding its real purpose inside the financial system.

Stablecoins showed that dollars could be rebuilt for the digital age. Tokenized Treasuries suggest the same thing will eventually happen to the rest of finance.

Just as I predicted when I said that tokenization is inevitable.

Regards,

Ian KingChief Strategist, Banyan Hill Publishing