How BlackRock lost control of the $10B tokenized Treasury market to Circle for one simple, mechanical reason

Tokenized US Treasuries crossed $10 billion in total value this week, a milestone that confirms the category has moved from proof-of-concept to operational infrastructure.

Yet, something happening underneath this achievement is just as important: Circle's USYC has edged past BlackRock's BUIDL as the largest tokenized Treasury product, signaling that distribution rails and collateral mechanics now matter more than brand recognition in determining which on-chain cash equivalents win.

As of Jan. 22, USYC holds $1.69 billion in assets under management compared to BUIDL's $1.684 billion, a gap of roughly $6.14 million, or 0.36%.

Over the past 30 days, USYC's assets grew 11% while BUIDL's contracted 2.85%, a divergence that reads less like marketing success and more like net creation flowing in one direction while redemptions drain the other.

This isn't a story about Circle beating BlackRock in a brand war. It's about collateral workflow design outperforming logo recognition.

Additionally, it maps directly onto the infrastructure question that regulators and institutions are now asking out loud: who shapes the stack that turns idle crypto capital into productive, yield-bearing collateral?

Distribution plus collateralization beats brand

USYC's clearest structural advantage is distribution through exchange collateral rails.

On July 24, Binance announced that institutional customers could hold USYC and use it as off-exchange collateral for derivatives, with custody handled through Banking Triparty or Ceffu and near-instant redemption into USDC.

Binance added BUIDL to its off-exchange collateral list on Nov. 14, four months after USYC.

That sequencing matters. If the cash collateral stack is built first inside prime brokerage and derivatives workflows, the product that integrates earlier captures the flow.

USYC didn't just get listed, it got embedded into the operational layer where institutions manage margin and collateral automation.

Circle positioned USYC explicitly as yield-bearing collateral that travels alongside USDC rails, meaning institutions that already route stablecoin flows through Circle's ecosystem can onboard USYC without building new operational pathways.

BlackRock's BUIDL entered the market with brand authority but without the same plug-and-play integration into crypto-native collateral systems.

Product mechanics suit trading collateral

RWA.xyz labels the two products differently under “Use of Income.” USYC is marked as “Accumulates,” meaning interest accrues within the token balance. BUIDL is marked as “Distributes,” meaning returns are paid out separately.

This distinction is mechanical, not cosmetic. Collateral systems, especially automated margin and derivatives infrastructure, prefer set-and-forget balances where value compounds without requiring operational handling of payouts.

An accumulating structure integrates more cleanly into collateral automation than a distributing one.

For institutions building collateral rails that need to scale across multiple venues and counterparties, the simpler the structure, the lower the operational drag.

RWA.xyz lists materially different entry requirements for the two products.

BUIDL restricts access to US Qualified Purchasers, requiring a minimum investment of $5 million in USDC. USYC targets non-US investors with a minimum of $100,000 USDC.

The funnel difference is structural. Qualified Purchaser status in the US requires $5 million in investable assets for individuals or $25 million for entities, a narrow gate that excludes most crypto-native funds, prop desks, and smaller institutional players.

USYC's $100,000 minimum and non-US eligibility open access to a broader set of offshore institutions, family offices, and trading firms that operate outside US regulatory perimeters but still need dollar-denominated, yield-bearing collateral.

BlackRock's brand carries weight, but the brand doesn't override access constraints. If a fund can't meet the Qualified Purchaser threshold or operates outside the US, BUIDL isn't an option. USYC is.

The addressable market for on-chain collateral skews heavily toward non-US entities and smaller institutions, exactly the segment USYC is designed to serve.

Net creation versus net redemption

The simplest explanation for the flip is the cleanest: flows moved.

USYC grew by 11% over the past 30 days, while BUIDL shrank by 2.85%. That's not a marketing differential. It's net issuance into one product, offset by net outflows from the other.

The recent flip suggests a discrete event or allocation decision rather than gradual drift. USYC's Binance integration, its accumulating income structure, and its lower entry threshold all reduce friction. BUIDL hasn't added comparable distribution momentum in the same window.

Tokenized Treasuries at $10 billion remain a small fraction of the $310 billion stablecoin market, but their role is shifting from niche experiment to operational default.

The International Organization of Securities Commissions (IOSCO) noted in recent guidance that tokenized money market funds are increasingly used as stablecoin reserve assets and as collateral for crypto-related transactions. This is precisely the interlinkages driving USYC's growth.

JPMorgan framed tokenized money market funds as the next frontier after stablecoins, centered on portability and collateral efficiency.

The bank's analysis treats tokenized Treasuries not as an alternative to stablecoins but as an evolution of them. They are programmable cash equivalents that settle faster, move across blockchains more easily, and integrate into collateral systems with less operational overhead than traditional custody arrangements.

With stablecoin yields near zero, tokenized Treasuries offer a risk-free on-chain rate without requiring users to exit crypto rails.

Instead of parking cash in non-yielding stablecoins or moving it off-chain to earn returns, institutions can now hold yield-bearing collateral on-chain that functions like cash but compounds like Treasuries.

What happens next

The $10 billion milestone is less important than the capture rate it represents.

Tokenized Treasuries currently account for roughly 3% to 4% of the stablecoin float. If that rate doubles over the next 12 months, which is a conservative assumption given current flow momentum and collateral integrations, tokenized Treasuries could reach $20 billion to $25 billion.

If collateral flywheels accelerate and more venues replicate Binance-style off-exchange rails, the range stretches to $40 billion to $60 billion.

The metrics that matter are all measurable: net issuance trends, collateral integration announcements, changes to eligibility requirements, and shifts in income-handling preferences.

USYC's 30-day growth rate and BUIDL's contraction are early signals. The Binance integration timeline is another. The funnel gap is a third.

USYC didn't flip BUIDL because Circle outspent BlackRock on marketing. It flipped because distribution, mechanics, and access constraints aligned with how institutions actually use on-chain collateral.

The category crossed $10 billion not because one flagship product dominated, but because multiple products are now competing on infrastructure terms: who integrates faster, who reduces friction, who widens the funnel.

Brand recognition opened doors. Collateral workflow design is keeping them open.

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