Blockchain technology is viewed by the United States Department of the Treasury as a means to enhance the financial market infrastructure, offering operational and economic efficiencies. In a recent report, the Treasury emphasized that evolving the legal and regulatory landscape is essential to harnessing the advantages of tokenization of legacy assets. During an Oct. 29 meeting, the Treasury's Borrowing Advisory Committee discussed the benefits of using stablecoins and tokenizing Treasury bills (T-Bills). Tokenization is believed to enhance liquidity in Treasury trading by minimizing operational frictions. Furthermore, the use of distributed ledger technology (DLT) and smart contracts can increase transparency in Treasury markets, offering regulators and investors real-time insights. The report also highlighted that the growing demand for stablecoins has contributed to the increasing interest in short-dated Treasuries. Committee members proposed the idea of establishing a permissioned blockchain for T-Bill tokenization, suggesting that this should be led by a reliable central authority with support from the private sector. The total market capitalization for stablecoins reached record highs in 2024, nearing $180 billion, indicating a significant shift toward digital assets in government bonds.

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