Tokenized funds rise to $11.39 for every $100 in stablecoins, nearly quadrupling in two years

Two years ago, tokenized funds barely registered as a blip against the stablecoin market. For every $100 parked in stablecoins, just $2.99 sat in tokenized fund products. That number now stands at $11.39, a nearly fourfold increase that tells a clear story: investors on-chain want yield, and they’re finding it.

The shift is happening against a backdrop of roughly $300B in total stablecoin market value, still overwhelmingly dominated by USDT and USDC. Tokenized real-world assets, the category that includes Treasury-backed funds and money market products, now represent somewhere between 10% and 17% of that stablecoin universe, depending on who’s counting.

Who’s leading the charge

The growth hasn’t been evenly distributed. A handful of products from heavyweight issuers account for most of the action. Circle’s USYC has accumulated roughly $2.5B to $3B in value. BlackRock’s BUIDL fund, which made waves when it launched on Ethereum, sits at approximately $2.2B to $2.7B. And Ondo’s USDY has carved out a position around $2.1B to $2.3B.

Total tokenized Treasury and money market fund value now ranges between $15B and $33B, a wide band that reflects the difficulty of tracking assets spread across multiple chains and wrapped in different structures. During peak growth periods, some of these products have posted monthly increases of 8% to 10% or more.

The appeal is straightforward. Traditional stablecoins like USDT and USDC function as digital dollars, great for payments and settlement, but they don’t pay holders anything. The issuers earn yield on the reserves backing those tokens, keeping the profit for themselves. Tokenized funds flip that model by passing short-term Treasury yields through to holders, turning idle on-chain capital into something that actually earns a return.

Regulation is both tailwind and ceiling

The emerging regulatory landscape is shaping up to be surprisingly favorable for tokenized funds, at least relative to stablecoins. The GENIUS Act, expected to take shape in 2025, would explicitly restrict yield payments on payment stablecoins while simultaneously positioning tokenized funds as acceptable reserves.

JPMorgan analysts have estimated that tokenized funds currently make up about 5% of the broader stablecoin ecosystem. Their assessment suggests that without significant legal adjustments, particularly around transferability and cross-platform interoperability, tokenized funds are unlikely to capture more than 10% to 15% of the total stablecoin market.

The transferability problem is real. Most tokenized fund shares can’t move as freely as stablecoins. They’re subject to KYC requirements, redemption windows, and compliance layers that make them less liquid than a plain USDT transfer.

The collateral play

Beyond simple yield generation, tokenized funds are finding a second life as infrastructure. Several protocols already use tokenized Treasury products as collateral or reserves backing other stablecoins. Ethena’s products, for example, have integrated tokenized assets as part of their reserve structure.

For institutional players, this is exactly the kind of composability that makes blockchain interesting. BlackRock didn’t launch BUIDL as a novelty. JPMorgan didn’t start analyzing tokenized fund market share for fun. These firms see a future where on-chain settlement of traditional financial products becomes standard, and they’re positioning accordingly.

What to watch from here

The GENIUS Act’s final form will matter enormously. If it codifies the yield restriction on payment stablecoins while creating clear compliance pathways for tokenized funds, expect capital rotation to accelerate.

There’s also the question of what happens when interest rates eventually come down. Tokenized Treasury funds are attractive precisely because short-term rates have been elevated. If the Fed cuts aggressively, the yield advantage that’s driving this shift shrinks, and the friction costs of tokenized funds become harder to justify relative to the simplicity of holding a plain stablecoin.