Circle USYC vs BlackRock BUIDL: A Race for On-Chain Fixed Income Infrastructure Funding

On May 13, 2026, the total locked value of tokenized U.S. Treasuries rose to a historic high of $153.5 billion. According to data from rwa.xyz, this number is up more than 280% from approximately $3.9 billion at the beginning of 2025. For the on-chain fixed-income sector—once viewed by mainstream finance as a “technology experiment”—this scale is no longer an ignorable fringe.

What’s worth paying attention to is not just the absolute figure. The overall RWA market cap crossed $30.9 billion in May 2026, up 44% year-to-date and with a year-over-year increase of over 200% (data source: ainvest). Tokenized Treasuries account for about half of the total, and the remaining share is jointly composed of tokenized private credit, tokenized commodity assets, and tokenized stock products. Among them, the active-loan size for tokenized private credit reached approximately $18.9 billion in Q1 2026, up 180% year over year. Everything points to the same fact: institutional capital’s allocation to on-chain yield-generating assets is undergoing structural acceleration rather than cyclical bursts.

This accelerating macro backdrop is also worth examining. At the start of 2026, the mainstream market narrative was that the Federal Reserve would begin a rate-cutting cycle in the first half of the year. But after April, the U.S. Consumer Price Index rose 3.8% year over year (official data from the U.S. Bureau of Labor Statistics), significantly increasing the likelihood that interest rates will remain elevated and reducing the chances of near-term rate cuts. Susan Collins, President of the Federal Reserve Bank of Boston, stated clearly in early May that inflation is still above the 2% target and that interest rates will stay high for a longer period. Against this backdrop, on-chain Treasury products that offer stable nominal yields have become a natural choice for institutional funds to make a defensive allocation within the crypto ecosystem.

USYC Surpasses BUIDL: The “Cross-Section” of Capital Flows

Within this $153.5 billion market, asset concentration is far beyond what most external observers imagine. The top 10 products combined hold more than $13.9 billion, and the top five account for about 68% of the total. A clear issuer-tier hierarchy is taking shape in the market, and the most critical narrative variable is happening between the two top products.

Circle’s USYC currently leads with assets of approximately $2.9 billion, surpassing BlackRock’s BUIDL in mid-March 2026. BUIDL ranks second with approximately $2.58 billion, followed by related products from Fidelity, Franklin Templeton, and Ondo, together making up the top five. USYC covers three blockchain networks—BNB Chain, Ethereum, and Solana—while BUIDL is deployed across 8 blockchain networks.

In terms of issuance scale, the gap between the two is not large—less than $0.4 billion out of the $153.5 billion total market, or roughly 0.25%. But behind this less-than-$0.4 billion difference are two entirely different growth logics.

USYC’s growth engine is highly concentrated in the BNB Chain ecosystem. According to Arkham Intelligence data, about 94% of USYC’s supply is deployed on BNB Chain. This highly concentrated distribution is driven by a key collaboration promoted after Circle acquired USYC issuer Hashnote—USYC was introduced into the BNB Chain ecosystem as an off-chain collateral for institutional derivatives trading. In other words, USYC’s growth is not coming from sporadic retail subscriptions; it is driven by institutions’ rigid demand for high-quality collateral in derivatives trading.

BUIDL’s growth trajectory shows different structural characteristics. BUIDL is the core reserve asset for on-chain stablecoins such as Ethena’s USDtb and Jupiter’s JupUSD, providing more than 90% of the reserves for related products. Unlike USYC’s “collateral-driven” path, BUIDL plays more of an “underlying” infrastructure role for stablecoins—it is not used as collateral for trading; instead, it becomes the value support layer for other on-chain dollar-denominated products.

At the micro level of capital flows, this “race” reflects a key change in the on-chain financial market: the growth of tokenized Treasuries is no longer driven solely by traditional fund issuance. It is increasingly being pulled from the demand side by crypto-native scenarios—derivatives trading, stablecoin minting, and collateral management. USYC captures the former, while BUIDL is deeply embedded in the latter.

Whether USYC’s scale advantage can be sustained still depends on three variables: first, changes in the activity trend of derivatives trading within the BNB Chain ecosystem; second, whether BUIDL’s demand for stablecoin reserves will accelerate due to regulatory adjustments; and third, whether the compliance restrictions that limit USYC to non-U.S. investors will weaken its potential for liquidity growth. Leadership is temporary, the path is variable, but the divergence between the two growth paradigms is structural.

The “Yield Cross-Point”: When DeFi Yields Fall Below Treasuries

If the above is a structural analysis of capital-flow distribution, then expanding the lens to the entire crypto yield market reveals an even more impactful yield comparison.

According to Tiger Research’s April 2026 report, the USDC deposit rate on Aave V3 is about 2.7%, already below the U.S. federal funds rate (3.5%–3.75%) and the 10-year Treasury yield (about 4.3%). In the same period, the average annualized yield of tokenized Treasuries over the past week was about 3.4% (data source: ainvest). The yield comes from U.S. government interest payments rather than token-issuance incentives from crypto protocols.

This is not a typical change in yield rankings. Since 2022, the spread between DeFi yields and traditional Treasury yields has kept narrowing toward zero, and in some periods yield inversion has even occurred. DeFi yields rely heavily on inflationary token incentive models, which are losing their appeal to institutional capital and rational investors in a high-interest-rate environment.

Exodus, according to industry tracking data, has accumulated losses of several hundred million dollars for DeFi protocols due to security vulnerabilities since 2026. In contrast, tokenized Treasuries are managed by licensed custodians. Compliant issuance and on-chain entitlement verification frameworks significantly reduce the smart-contract attack surface. When a yield advantage no longer exists but a risk premium still remains, institutional investors’ choice between the two is virtually free of hesitation.

Exodus isn’t fundamentally about “RWA killing DeFi.” Instead, a high-interest-rate environment acts as a filter, helping the market distinguish which yields come from real-asset cash flows and which come from self-reinforcing cycles sustained by token subsidies. The former creates structural pressure on the latter in the high-rate era—this is the core mechanism of the so-called “crowding-out effect.”

However, it needs to be made clear that “crowding out” does not mean “replacement.” There are still scenarios in DeFi where tokenized Treasuries cannot cover, such as highly complex structured yield strategies, on-chain derivatives portfolios, and certain community-driven products that rely on protocol governance value. What tokenized Treasuries are crowding out are the low-efficiency DeFi strategies with unclear yield sources that rely only on inflation subsidies—not the existence value of the entire decentralized finance system.

The Industry’s “Multi-Directional Race”: From Platform Launches to Regulatory Games

Around May 13, 2026, multiple parallel industry developments jointly painted a busy picture of the tokenized fixed-income market.

JPMorgan has applied to launch an Ethereum-based tokenized government money market fund, JLTXX, mainly investing in short-term U.S. Treasuries and fully collateralized overnight repurchase agreements. The timing itself is a signal: the entry of one of the world’s largest banks suggests that competition in the supply side of tokenized Treasury products is accelerating beyond crypto-native institutions and spreading toward traditional financial institutions.

Meanwhile, on May 8, BlackRock submitted filing documents to the U.S. Securities and Exchange Commission for two new tokenized funds, aiming directly at the stablecoin market that currently does not generate yields. The firm also publicly opposed a draft rule proposed by the U.S. Office of the Comptroller of the Currency to set an upper limit of 20% for tokenized reserve assets, arguing that the limit should be determined by asset quality rather than the form of the ledger. The direction of this regulatory friction will directly affect the expansion space of BUIDL and similar products within the banking system.

At the ecosystem’s foundational layer, Animoca Brands and Nuva Labs jointly launched the Ethereum marketplace platform NUVA on the same day, aiming to map traditional credit assets onto decentralized finance markets. Although this is not a direct incremental driver for tokenized Treasuries, it marks that the on-chain fixed-income market is expanding from “pure Treasuries” to “multiple asset classes.” After Treasuries, tokenized mortgage loans, private credit, and commodity tokenization are being moved on-chain in sequence.

Regulatory currents are also surging. The SEC’s three divisions had already issued a joint statement on tokenized securities in January this year; a rules change approved by Nasdaq in March now allows securities trading in tokenized form; and the advancement of the implementation of the GENIUS Act provides a new institutional framework for stablecoin and tokenized-asset reserve regulatory rules. The multi-threaded regulatory progress points to a common direction: tokenized fixed income is moving from “regulatory gray areas” toward “compliant infrastructure.”

Exodus at the current stage is no longer competition among a single product or a single track, but a three-dimensional parallel landscape—product dimension (the scale contest between USYC and BUIDL), channel dimension (exchange integrations, stablecoin embedding, platform distribution), and rule dimension (the OCC cap dispute, the SEC classification framework, and the bill implementation timeline). Breakthroughs or setbacks in any dimension could reshape the distribution of market share again.

Are Institutions Really “Using” It?

Any industry hot-topic narrative needs to pass fact-checking. A key question is whether institutional capital is truly using blockchain to reshape the fixed-income market, or merely treating it as a new issuance channel.

It is necessary to strictly distinguish between two different levels of “use.” The first level is purchasing behavior—meaning institutions allocate on-chain Treasury products as income-generating cash management tools. In this sense, institutions are indeed “using” these products. The continually growing number of active addresses holding on-chain assets is an objective fact that cannot be denied. However, most holders are crypto-native protocols and funds, and the direct participation of traditional pension funds, university endowment funds, and insurance capital remains limited.

The second level is infrastructure-level reconstruction—namely whether financial institutions are using blockchain technology to replace traditional clearing, settlement, and custody processes. This is the true meaning that the term “reshape” points to. Progress is real in this dimension. In 2025, the U.S. securities depository and settlement company DTCC received an SEC no-objection letter and plans to launch production-grade tokenization services for U.S. Treasuries. The trading volume it handled in prior years has reached a scale of tens of trillions of dollars. The transaction settlement time for tokenized Treasuries has been compressed from T+1 or T+2 to near real-time settlement. For derivatives trading and stablecoin minting scenarios that rely on rapid collateral flows, this has direct economic value.

The cautious conclusion is that institutions are indeed using blockchain to reshape the issuance layer and collateral management layer of fixed income, but they are still far from the goal of a full-scale migration of the entire fixed-income market infrastructure onto-chain. The current application forms are closer to “traditional products wrapped on-chain” than to a “native on-chain” fixed-income ecosystem.

Conclusion

$153.5 billion is not the endpoint, but a benchmark. It means tokenized Treasuries have evolved from a narrative that needed to be “proven feasible” into an asset class that can be measured in terms of scale and growth rate. The capital-flow micro details of Circle USYC surpassing BlackRock BUIDL are only a cross-section of competitive dynamics within this market; the “crowding-out effect” of high inflation conditions on DeFi yields is the macro transmission mechanism of this market.

But all the above judgments rest on a shared assumption: the yields of tokenized Treasuries come from the U.S. government’s credit backing and interest payments, not from any token subsidies from crypto protocols. This assumption itself defines the most fundamental difference between the RWA narrative and all previous crypto narratives—when real-world asset cash flows are brought onto the blockchain, the standard used to measure asset value finally returns to cash flows themselves.