Ethereum News Update: ISO 20022 Connects Blockchain with Banking Sector, Unlocking $100 Trillion Market

UBS and

have completed the first onchain redemption of a tokenized fund in a market projected to hit $100 trillion, representing a significant leap in merging blockchain with conventional finance. This achievement, realized through a pilot utilizing ISO 20022 messaging protocols, showcases how banks and blockchain platforms can work together to simplify settlement for real-world assets (RWAs). This progress comes amid a rapid rise in tokenized U.S. Treasuries, which now boast a $8.6 billion market cap, as reported by .

This pilot, run in partnership with Swift and

Tokenize, enabled both subscriptions and redemptions for a tokenized fund using the standardized ISO 20022 message format, which is widely used in traditional securities and payment settlements. By using this method, there is no need for custom system integrations, allowing custodians and fund managers to handle tokenized assets within their current processes. "The experiment showed that the same messaging banks rely on today can now activate smart contracts on blockchain," Cointelegraph reported, highlighting a move toward greater interoperability.

Tokenized money-market funds (MMFs), which invest pooled cash into short-term U.S. government debt, are increasingly being used as collateral in trading, lending, and repo markets. BlackRock’s BUIDL, the largest tokenized MMF, currently manages $2.85 billion, followed by Circle’s USYC and Franklin Templeton’s BENJI, holding $866 million and $865 million, respectively. Institutional uptake is on the rise, with exchanges such as Deribit and Bybit accepting tokenized Treasuries as collateral, and DBS Bank in Singapore piloting tokenized funds for repo deals.

Although the sector is expanding, obstacles remain. Regulatory rules restrict most tokenized funds to Qualified Purchasers, keeping retail investors out, while limited liquidity and set redemption periods reflect traditional fund structures. Additionally, exchanges often apply discounts to tokenized assets due to their lower liquidity compared to standard Treasuries. For instance, Deribit reduces margin requirements by 10% for tokenized collateral.

The outlook for the sector is optimistic.

the tokenization industry could grow to $2 trillion by 2028, with leading the way thanks to its robust infrastructure and dependability. The bank identified tokenized MMFs and listed stocks as major growth drivers, each expected to account for $750 billion of the total. At the same time, Ethereum’s role is highlighted by its hosting of 75% of tokenized RWAs and 60% of global stablecoins, cementing its position as the foundation of this transformation.

There is ongoing debate about Ethereum’s architecture, with

advocating for the removal of a feature he believes is incompatible with zero-knowledge proofs, reflecting continued discussion about the network’s future path.

Tokenized Treasuries surpass $8.6B as banks and exchanges expand collateral applications