Tokenized US government debt used as collateral in leveraged trading exposes crypto markets to further geopolitical and liquidity risks. The growing use of yield-bearing tokenized US Treasury products as collateral for leveraged crypto trading creates new pathways for risk transmission across markets, increasing the likelihood of cascading effects on decentralized finance (DeFi) protocols. Tokenization is the process of converting real-world assets into digital tokens on a blockchain. In the case of US Treasurys, these tokens represent onchain claims to government debt, offering an alternative comparable to money market fund shares. The current market capitalization of tokenized US Treasurys stands at nearly $7.4 billion. According to a June report from rating service Moody’s, although short-term liquidity funds are low-risk assets, they are not riskless: Read more
More than 220 companies now hold Bitcoin on their balance sheets. But as VanEck warns of capital erosion and GBTC’s crash proves, not all bets pay off. In recent years, an increasing number of companies has embraced Bitcoin as part of their corporate treasury strategy. This trend, initially seen as experimental, gained momentum when Strategy, a US-based software company, started converting its cash reserves into Bitcoin (BTC) back in 2020. Strategy’s move sparked widespread interest among other businesses seeking a hedge against fiat currency debasement and the potential for Bitcoin’s price appreciation. Read more