FalconX launches support for USTB-collateralized trades as tokenized US government securities gain ground

FalconX has launched support for collateralizing trades with tokenized T-Bill as some investors’ appetites for U.S. government-issued securities grow.  

The crypto-focused prime brokerage executed its first trade using USTB as collateral on June 11, a FalconX representative told The Block. USTB is a digital token representing short-term debt securities issued by the U.S. government that can be traded on public blockchains. 

The firm's acceptance of the token as collateral comes as U.S. T-bills continue to offer yields above 5% following the Federal Reserve's rate hikes aimed at curbing inflation. As a result, some risk-averse traders are investing in T-bill-backed digital assets instead of stablecoins, which can experience price volatility if they depeg from the assets to which their value is fixed. 

FalconX's acceptance of USTB marks the prime brokerage's latest experiment with tokenized real-world assets. Earlier this year, the firm began accepting BUIDL, an Ethereum-native token backed by U.S. Treasury bills, as collateral for trades. 

More broadly, on-chain versions of government bonds and other real-world assets are gaining traction among investors. The market value of tokenized government securities under management has nearly doubled in the past year, totaling roughly $1.54 billion as of the time of writing, according to digital asset firm 21.co’s data.