Tokenized Treasuries, MMFs, and Deposit Tokens: The Three Core Pillars of Institutional On‑Chain Finance

-

3-Point Summary

  • Tokenized Treasuries and MMFs serve as institutional investment assets, primarily utilizing public or hybrid blockchain architectures.
  • Deposit Tokens function as the "on-chain cash" layer, enabling 24/7 real-time settlement within permissioned banking networks.
  • The integration of these three pillars through atomic settlement is defining the new core infrastructure for institutional finance.
Understanding the On-Chain Lifecycle of Treasuries

Understanding the distinct on-chain lifecycles of Treasuries, MMFs, and Deposit Tokens is key to navigating the future of institutional RWA tokenization.

50-Second Shorts Video

Watch this 50-second breakdown before diving into the full analysis below.

Inside the Lifecycle of Tokenized Treasuries, MMFs, and Deposit Tokens

RWA tokenization is no longer a mere experiment; it is rapidly becoming core infrastructure for institutional finance. Among them, tokenized treasuries, MMFs, and deposit tokens are emerging as the three key pillars that structure the new on-chain financial layer.

  • Tokenized Treasuries: Regulation-friendly, collateral-first, institution-centric
  • Tokenized MMFs: Stable short-term liquidity, strong demand from corporates and insurers
  • Deposit Tokens: Settlement-focused, core to bank and SWIFT infrastructure

All three assets live on blockchain rails for trading, settlement, and collateralization, but the way they operate on-chain differs significantly depending on their economic role. Below is a structured look at the lifecycle of each asset.

1) Tokenized Treasuries

Tokenized treasuries are the first RWA that institutional investors have adopted at scale. They combine regulatory friendliness, credit quality, and collateral utility in a single instrument.

Lifecycle Overview

Issuance (Off-chain)
The U.S. Treasury issues government bonds, and a custodian holds the underlying securities.

Tokenization (On-chain)
The custodian mints tokens that represent the underlying treasuries on a 1:1 basis.
Both public chains (e.g., Ethereum) and permissioned networks are used.

Trading (On-chain)
Institutions and corporates buy and hold tokenized treasuries in on-chain wallets.

Collateralization (On-chain)
Used as collateral in repo, derivatives margining, and services like TCN or Citi Token Services.
These flows are typically handled on permissioned networks.

Settlement (On-chain)
Tokenized treasuries are investment assets, so they do not function as money.
Settlement therefore occurs via an exchange between treasury tokens ↔ deposit tokens or stablecoins.
This is executed through atomic settlement, where both legs of the trade (assets and payment tokens) move simultaneously, eliminating settlement risk and enabling 24/7 trading.
Deposit tokens and stablecoins effectively act as “on-chain cash” in this process.

Redemption (On-chain + Off-chain)
At maturity, the underlying treasuries are redeemed off-chain, and the corresponding tokens are burned on-chain.

Tokenized treasuries are a prime example of hybrid architectures that combine public and permissioned blockchains.

2) Tokenized Money Market Funds (MMFs)

Tokenized MMFs are the on-chain version of short-term liquidity management. They are particularly attractive to corporate treasuries, insurers, and other institutions seeking stable yield.

Lifecycle Overview

Issuance (Off-chain)
An asset manager constructs the MMF portfolio off-chain.

Tokenization (On-chain)
Fund shares are issued as ERC‑20 or similar tokens.
These are primarily deployed on public chains such as Ethereum.

Trading (On-chain)
Corporate treasuries and institutions purchase and hold MMF tokens on-chain.

Collateralization (On-chain)
MMF tokens can be pledged as short-term liquidity collateral.
They can be used across both public and permissioned networks.

Settlement (On-chain)
Like treasuries, MMF tokens are investment assets and do not serve as a payment instrument.
Settlement therefore occurs via MMF tokens ↔ deposit tokens or stablecoins.
Trades are executed at NAV-based prices, making them suitable for short-term liquidity management by corporates.
As with treasuries, a separate settlement token is essential for completing the transaction.

Redemption (On-chain + Off-chain)
Upon redemption, the underlying assets are settled off-chain, and the corresponding MMF tokens are burned on-chain.

As seen in examples like BNP Paribas’ tokenized MMFs, this asset class is expanding rapidly on public chains.

3) Deposit Tokens

Deposit tokens form the core settlement layer of on-chain finance. Banking and SWIFT infrastructure are increasingly being re-architected around this instrument.

Lifecycle Overview

Issuance (On-chain)
Banks issue deposit tokens on a 1:1 basis against customer deposits.
These tokens are almost exclusively deployed on permissioned networks.

Circulation (On-chain)
Used for interbank settlement and corporate treasury cash management.

Collateralization (On-chain)
Employed as collateral for derivatives margining and clearing.
A permissioned network is required due to regulatory and KYC/AML constraints.

Settlement (On-chain)
Deposit tokens are natively designed for settlement—they are effectively “on-chain cash.”
No separate payment asset is needed: settlement occurs directly via deposit token ↔ deposit token transfers.
Interbank payments, corporate treasury flows, and even SWIFT-linked transactions can be processed in real time.
Because deposit tokens represent digital bank deposits on permissioned networks, they enable true 24/7 settlement.
When integrated with SWIFT, they can also bridge to public chains like Ethereum, connecting traditional and on-chain payment infrastructures.

Redemption (On-chain + Off-chain)
When a customer requests redemption, the deposit tokens are burned on-chain and cash is paid out off-chain.

Given the centrality of banking regulation, deposit tokens are predominantly operated on closed, permissioned blockchains.

In Summary

  • Tokenized Treasuries: Public (Ethereum) + permissioned hybrid; require deposit tokens or stablecoins for settlement
  • Tokenized MMFs: Primarily public; also require deposit tokens or stablecoins for settlement
  • Deposit Tokens: Almost entirely permissioned; serve as the settlement asset itself, no separate payment token needed

Together, they form the architecture of institutional on‑chain finance: investment assets on public chains, settlement assets on permissioned networks, unified through atomic settlement flows.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

If you would like to read this article in Korean, please click the button below.

댓글

댓글 쓰기

이 블로그의 인기 게시물

Ethereum’s Quiet Takeover: How Stablecoins and Tokenized Assets Are Rewriting Global Finance

-
이미지
Ethereum’s Quiet Takeover: How Stablecoins and Tokenized Assets Are Rewriting Global Finance In 2026, the global financial system is undergoing a profound transformation—quiet on the surface, but seismic underneath. At the center of this shift is Ethereum . Once viewed simply as a smart‑contract platform, Ethereum has now become the settlement and liquidity backbone of global finance, reshaping the very structure of how money and assets move. How Ethereum Became the Foundation of Global Finance Stablecoin payments and real‑world asset tokenization (RWA) are expanding faster than ever. What’s striking is that this movement is no longer led by crypto startups. Instead, Visa, Stripe, PayPal, JPMorgan, BlackRock, and Fidelity —the world’s largest financial institutions—are building new financial infrastructure directly on Ethereum. Recent on‑chain data highlights the scale of this shift: Tokenized funds: 31,300 holders Tokenized equities: 21,000 holders Tokenized commodities: 116,...
자세한 내용 보기

The Real Reason the CLARITY Act Stalled: A USDC Yield War Between Coinbase and the Banks

-
이미지
3-Point Summary The CLARITY Act stalled not because of regulators, but due to internal industry conflict. The core battle centers on whether stablecoins like USDC should be allowed to generate yield. Coinbase’s opposition to a yield ban significantly weakened political momentum for the bill. The CLARITY Act stalled because the industry itself couldn’t agree on who controls the economics of digital dollars. 50-Second Shorts Video '" style="cursor: pointer; position: relative; width: 100%; aspect-ratio: 1/1; border-radius: 8px; overflow: hidden;"> Watch the 50-second video to understand why the CLARITY Act stalled before diving into the full analysis below. Why the CLARITY Act Stalled: Not Regulation, but an Internal War 1) What the CLARITY Act Was Trying to Do The CLARITY Act is ...
자세한 내용 보기

비트코인은 자산, 이더리움은 인프라: 기관이 다시 짜는 글로벌 금융의 판도

-
이미지
비트코인과 이더리움—같은 기관 채택, 완전히 다른 두 개의 트랙 기관들의 암호자산 채택 속도가 눈에 띄게 빨라지고 있다. 하지만 이 흐름 속에서 비트코인과 이더리움이 맡고 있는 역할은 근본적으로 다르다. 비트코인은 기관의 포트폴리오에 편입되는 ‘보유 자산’ 으로 자리 잡고 있고, 이더리움은 글로벌 금융 시스템이 다시 구축되는 ‘운영 인프라’ 로 기능하고 있다. 이 둘은 경쟁 관계가 아니라, 새로운 금융 아키텍처를 구성하는 두 개의 기둥이다. 1. 비트코인: 기관이 ‘보유하는 자산’ 최근 블랙록이 단 10거래일 만에 17,645 BTC(약 11억 6천만 달러) 를 매수한 사실은 시장의 시선을 사로잡았다. 이는 채굴자들이 생산하는 속도보다 더 빠르게 비트코인을 흡수하는 수준이다. 기관들이 비트코인을 반드시 보유해야 하는 자산 으로 인식하고 있다는 강력한 신호다. 비트코인이 기관 포트폴리오에서 차지하는 의미는 명확하다. ETF 운영을 위한 재고 확보 블랙록의 IBIT 현물 ETF는 투자자 수요를 충족하기 위해 대량의 BTC를 보유해야 한다. 기관 고객에게 제공하는 규제된 비트코인 접근성 연기금, 보험사, 국부펀드 등은 직접 보관 리스크 없이 비트코인에 노출되기를 원한다. 디지털 금으로서의 포지셔닝 래리 핑크는 비트코인을 글로벌 거시 자산, 가치 저장 수단, 인플레이션 헤지로 규정해 왔다. 장기적 희소성에 대한 선제적 대응 블랙록의 공격적 매수는 희소 자산을 조기에 확보하려는 전형적인 기관 전략이다. 결국 비트코인은 금고에 보관되는 자산 , 즉 디지털 금이다. 기관은 비트코인을 ‘운영’하지 않는다. 보유한다. 2. 이더리움: 금융 자산이 실제로 ‘움직이는 인프라’ 이더리움은 완전히 다른 질문에 답한다. “금융 자산은 어디에서 발행되고, 이동하고, 결제되고, 운영될 것인가?” 기관들은 ETH를 단순히 사들이는 것이 아니라, 이더리움 위에 금융 시스템을 구축하고 있다. 대표적인 사례는 다음과 같다. JP Morgan — Onyx, JPM Co...
자세한 내용 보기