Tokenized Funds, Not Stablecoins, May Be the True Engine Driving Crypto Growth in 2025

TradingKey - So far in 2025, stablecoins and asset tokenization have emerged as the two biggest trends in the crypto space. Compared to the steady 25% increase in stablecoin market capitalization this year, tokenized money market funds and U.S. Treasury-backed products have surged by an impressive 80%, highlighting the massive growth potential of this segment.

According to RWA.xyz, as of early July, the total assets under management (AUM) in tokenized treasury products — including digital tokenized funds and U.S. Treasury bonds — have grown by 80% year-to-date, reaching $7.4 billion. Among them, BlackRock’s tokenized fund BUIDL and Franklin Templeton’s BENJI lead the market in terms of scale, with growth rates reaching up to double that of others.

Total Value of Tokenized Treasury Products, Source: RWA.xyz

Data from DeFiLlama shows that over the same period, the stablecoin market cap increased by 24.58%, reaching $255.6 billion. This year, the passage of the U.S. GENIUS Act and Hong Kong’s stablecoin regulations has triggered a global wave of regulation and standardization for stablecoins. Circle, referred to as the first "stablecoin stock," saw its share price surge tenfold in its debut month.

Stablecoin Market Cap in 2025, Source: DeFiLlama

As reported by the Financial Times, the tokenized treasury market has attracted significant inflows from crypto firms and traders who find tokenized funds more suitable than stablecoins for holding idle capital. These funds are also increasingly used as collateral in crypto derivatives trading.

Olivier Portenseigne from FundsDLT, a subsidiary of a major clearinghouse, said that while stablecoins still dominate, tokenized money market funds are becoming the real tradable instruments, and traders are beginning to shift toward this space.

Portenseigne added that tokenization offers a cheaper and more accessible way to invest in mutual funds, significantly improving liquidity.

Both crypto traders and traditional financial institutions have been buzzing about the growth prospects of Real World Assets (RWA) tokenization in recent months. The rationale is that tokenization can enable more efficient and lower-cost transactions, and the role of tokenized treasuries and money market funds as collateral is accelerating adoption.

McKinsey estimates that the future market size for tokenized mutual funds, bonds, and exchange-traded notes could grow to $2 trillion — roughly 30% of the current $7 trillion traditional money market fund industry.

Moody’s analysts noted that, unlike most stablecoins, tokenized products allow investors to hold any spare cash “in a format that is easy to use and earn a yield.

On the other hand, stablecoin issuers themselves are contributing to the expansion of tokenized assets by investing their reserves into high-quality, yield-generating assets like tokenized Treasuries. 

For example, Janus Henderson’s $409 million tokenized treasury fund is primarily held by Sky Money, the issuer of the third-largest stablecoin, USDS, formerly known as MakerDAO.

However, some voices caution that the tokenized asset space is still in its infancy. Tokenized bonds, for instance, are not yet more liquid or efficient than traditional cash bonds and may still lag behind in key aspects.