A new era has opened in which buying coins allows investment in U.S. Government Bonds, one of the safest assets in the world. The democratization of real asset tokens (RWA), which create financial products in token form, is enabling anyone around the globe to trade easily 24 hours a day.
According to Castle Labs, a platform analyzing the RWA market, the size of the tokenized U.S. Government Bonds market surpassed $7.3 billion (approximately 9.94 trillion won) the day before. Considering it was $4.1 billion (approximately 5.58 trillion won) in January this year, it has grown by 78% in about six months. As of the previous day, the estimated annual yield of U.S. Government Bonds tokens is 4.14%.
The leader in this market is BlackRock, the world's largest asset management firm. The market capitalization of the fund (BUIDL) created by BlackRock in March last year to tokenize U.S. Government Bonds is $2.887 billion (approximately 3.93 trillion won), the largest among similar funds.
Investors can purchase a token called 'BUIDL' to invest in low-risk assets such as U.S. short-term Government Bonds, repurchase agreements (RP), and bank dollar deposits. They can buy tokens anytime 24/7 and sell tokens to generate revenue. BUIDL operates as a private fund targeting institutional investors. Although the yield is not officially calculated, it is known to exceed an annual average of 4%.
Investors can purchase BUIDL tokens using USDC. USDC is a stablecoin pegged to the dollar, where 1 USDC holds the same value as $1. USDC acts as the dollar and reserve currency in the world of virtual assets. Investors can conclude their investment by converting their cash (dollars) into USDC and then purchasing BUIDL tokens.
BlackRock converts the USDC received from investors back into cash (dollars) and invests it in the fund created for U.S. Government Bonds. The funds from investors flow into U.S. Government Bonds in the order of investor → USDC → dollars → BlackRock fund → U.S. Government Bonds.
When BlackRock generates revenue from investing in U.S. Government Bonds, it issues BUIDL tokens to investors equivalent to the revenue. Investors receive interest in the form of tokens, not cash, every month. Over time, as the quantity of tokens held increases (as interest accumulates), they can sell these to BlackRock for profit. The price of one BUIDL token is fixed at $1, designed to prevent the loss or profit from price fluctuations like Bitcoin.
While this investment method is currently centered around institutional investors, expectations are rising that it could become more mainstream. In fact, BENJI, which records the second-largest market capitalization (approximately 994.5 billion won) in the tokenized U.S. Government Bonds market, is officially available for purchase by retail investors as well. Similar to BUIDL, purchasing BENJI tokens invests in low-risk assets such as U.S. Government Bonds. BENJI is managed by Franklin Templeton, an asset management firm with managed assets amounting to 1,900 trillion won.
The reason for tokenizing financial products is to efficiently change the transaction process. Investing in U.S. Government Bonds through traditional methods takes 1 to 3 business days for actual settlement. Time is also needed for redemption and settlement. The transaction process involves multiple institutions such as brokerage firms, which incurs expenses.
On the other hand, trading U.S. Government Bonds as tokens allows for immediate settlement. The biggest advantage is that transactions are possible 24/7, regardless of weekends or holidays. Aside from transaction fees for transferring tokens and management fees paid to asset management firms like BlackRock and Franklin Templeton, no additional fees are incurred. It is also an advantage that anyone around the world, not just Americans, can invest in financial products that were previously difficult to access.
Such RWAs have been regaining attention since Donald Trump became President of the United States. This resurgence follows news that World Liberty Financial, run by the Trump family, continuously buys U.S. Government Bond and dollar tokens from the blockchain technology company, Ontofinance. Onto's U.S. short-term Government Bonds token (OUSG) has a market capitalization of 960 billion won, ranking third. Combining it with the market capitalization of the U.S. dollar token (USDY) (920 billion won) essentially makes it the second largest after BlackRock.