Tokenized Treasuries Growing Rapidly

Securitize CEO Carlos Domingo predicts BlackRock’s BUIDL fund will soon reach another $500 million milestone. Earlier this week, BUIDL crossed $500 million, setting a record for a tokenized money market fund. Domingo believes the next milestone will come quickly due to the rapid growth of tokenized funds.

Tokenized funds have gained significant traction recently, according to Domingo. BlackRock and Securitize launched BUIDL earlier this year. However, only qualified investors with over $5 million in assets can subscribe through Securitize.

The rise of stablecoins has played a role in this growth, prompting thoughts about other assets that could be tokenized, Domingo explained. Currently, the tokenized treasuries market, including BUIDL, is valued at $1.8 billion. Domingo expects this to surpass $2 billion soon. Although smaller than the $160 billion stablecoin market, “it’s growing much faster than stablecoins,” he said.

Stablecoins are easier to buy and use due to their permissionless nature, while tokenized treasurys are securities with more restrictions. Domingo believes tokenized treasurys can become 10% to 20% of the stablecoin market but won't grow as large. The launch of Bitcoin ETFs earlier this year boosted the industry, but Domingo sees them as operating on "parallel paths" with tokenization. “Bitcoin ETFs bring a Web3 asset into traditional finance, while tokenization brings traditional finance assets into the Web3 space,” he said.

Interest in BUIDL has intensified conversations within the industry, Domingo noted. Asset managers are keen to participate, given BUIDL’s success. Franklin Templeton’s FOBXX fund, launched last April, reached $400 million, a 16% increase in 30 days. BUIDL, in comparison, saw a 9% jump in the same period.

Domingo is optimistic about BUIDL’s growth, teasing new features to be unveiled soon. The fund, launched just four months ago, has a pipeline of institutional investors ready to come on board. “Onboarding institutions takes time, but once they’re in, they will invest,” he added.

The success of BUIDL has spurred discussions between BlackRock and Securitize about future projects. While there are no new projects currently, Domingo emphasized the focus on expanding BUIDL’s utility, functionality, and integration within the ecosystem. “We’re more focused on growing BUIDL than launching new projects right now,” he said.

Despite growth ambitions, Securitize is not looking to raise more funds at the moment. In May, BlackRock led a nearly $50 million funding round for Securitize. Domingo stated, “We have plenty of money and don’t need to raise more. Raising money has been a distraction, and we’re focused on execution.”