Forward Guidance Newsletter Segment

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Given yesterday’s stablecoin bill progress and BlackRock’s tokenized money market fund hitting $1 billion AUM, it’s a timely moment to highlight the expected growth of these segments in tandem.

The asset milestone for BlackRock’s BUIDL—a fund investing in cash, US Treasury bills, and repurchase agreements—comes a week before its first birthday. The tokenized treasury category, with contributors like Ondo, Hashnote, and Franklin Templeton, has grown to approximately $4.4 billion.

Source: rwa.xyz

BlackRock’s Robbie Mitchnick stated during Wednesday’s Blockworks roundtable that a majority of BUIDL users are crypto-native firms. These organizations see the value in efficiently generating yield on cash balances, potentially shifting capital between countries or facilitating quick global payments and achieving liquidity faster through stablecoin exit ramps.

Waqar Chaudry, Standard Chartered’s head of digital assets, financing, and securities services, pointed out that some industry watchers initially believed tokenized money market funds might replace stablecoins. However, he observed that many may prefer tokenized funds for collateral management. They will co-exist, with money market funds being subscribed and redeemed via stablecoins on a 24/7 basis.

Chaudry remarked, “I’m not saying it’s 50/50 or 80/20,” regarding the stablecoin/tokenized MMF mix. The development over the next few years will determine their balance, but he emphasized that they are complementary.

Mitchnick shared his view that tokenized money market funds could serve as the primary cash savings vehicle, while stablecoins would maintain their dominance as payment instruments. He noted that “both are a little bit better than the other at those respective use cases, as long as you keep the frictions down to an extremely low or near-zero level to be able to move between them. Then you can use them in duality in a really powerful way.”

Currently, while tokenized treasurys are gaining traction, stablecoins represent a much larger market segment, boasting a $220 billion market cap.

Source: rwa.xyz

US lawmakers recognize the value of stablecoins. Casey detailed how a bill aiming to establish regulatory guidelines for stablecoin issuers advanced to the Senate floor yesterday.

However, Mitchnick pointed out, “What we haven’t seen happen to date in really any arena of tokenization is broad-based uptake from investors and holders who have always lived in the traditional assets base and on those rails.” This indicates the potential growth for BUIDL as the total addressable market expands.

Chaudry noted that the story of tokenized bonds “still is not gelling well in terms of commercial viability.” Furthermore, he suggested that there would likely be “limited traction” for tokenized equities due to the efficiency of those markets already. There are ongoing efforts to tokenize more illiquid asset classes, such as real estate and private equity.

Executives from BNY, Ondo Finance, Securitize (the firm that worked with BlackRock on BUIDL), and Nomyx will join me at the Blockworks Digital Asset Summit panel titled “Tokenization: Rebooting the Global Financial System” to discuss this topic further.

See you there!