Treasury-backed: what do you actually own?

Signal Summary

1. Three tokenized Treasury products examined — BUIDL (private fund shares), BENJI (registered mutual fund shares), and USDY (secured notes on a bankruptcy-remote LLC) — give investors structurally different legal claims on what is ostensibly the same underlying asset class.

2. Redemption terms diverge materially: BUIDL offers T+0 settlement to USDC through a dedicated Circle facility; BENJI settles on a standard mutual-fund T+1 cycle; USDY imposes a 40–50 day transfer-restriction period on newly minted tokens under its Reg S structure, though existing tokens trade freely on secondary markets.

3. Only BENJI (FOBXX) is registered under the Investment Company Act of 1940 and subject to Rule 2a-7 money-market constraints, including a 99.5% government-securities floor and a 60-day weighted-average-maturity cap. The other two products operate under private-placement or offshore exemptions with different — not necessarily fewer — disclosure obligations.

The Question

When an allocator buys a "tokenized Treasury," the assumption is straightforward: the token represents US government debt. The reality is more layered. The legal claim an investor holds — and who owes them money — varies across products that describe themselves in similar terms.

Consider three products, each holding short-duration US Treasuries.

In the first, the investor holds shares in a BVI professional fund. BlackRock manages the portfolio. BNY Mellon custodies the underlying Treasuries. Securitize acts as transfer agent and broker-dealer. The investor's claim is an equity-like participation right in the fund's net assets, offered under Reg D 506(c) to qualified purchasers with a $5 million minimum subscription.

In the second, the investor holds shares in a US-registered mutual fund governed by the Investment Company Act of 1940. The fund must hold at least 99.5% of assets in government securities, cash, and repos collateralised by those securities. The blockchain serves as a secondary record of ownership; per the prospectus, the fund's books and records remain the primary source of truth in the event of any discrepancy.

In the third, the investor holds a senior secured note on a Delaware bankruptcy-remote LLC. Ankura Trust acts as collateral agent with authority to seize and liquidate assets if the issuer fails to maintain a minimum 3% overcollateralisation, pay promised interest, or files for bankruptcy. The note is offered under Reg S to non-US persons only.

The underlying asset is similar in each case. The structure around it is not. A private fund share, a regulated mutual fund share, and a secured note create different recovery paths, different regulatory protections, and different counterparty exposures.

Evidence Panel

Structural comparison: three tokenized Treasury products

| Dimension | BUIDL | BENJI (FOBXX) | USDY | |---|---|---|---| | Investor's claim | BVI professional fund shares (equity-like participation) | US-registered mutual fund shares (40 Act) | Senior secured note on bankruptcy-remote Delaware LLC | | Regulatory wrapper | Reg D 506(c) | Investment Company Act 1940, Rule 2a-7 | Reg S offshore distribution | | Portfolio manager | BlackRock | Franklin Templeton | Ondo USDY LLC (servicer: Ondo Finance) | | Underlying custody | BNY Mellon | JP Morgan | Morgan Stanley, StoneX | | Transfer agent | Securitize | Franklin Templeton (Benji platform) | Ondo (smart contract + KYC) | | Eligibility | Qualified purchasers, US accredited investors | US retail and institutional | Non-US persons only | | Minimum | $5,000,000 | No statutory minimum | $500 | | Redemption | T+0 to USDC (Circle facility); T+1 to USD wire | Standard mutual fund T+1 | T+1 ordinary; 40-50 day lockup on new mints | | Blockchain role | Token = fund share; whitelist-restricted transfer | Secondary record; fund books are primary per prospectus | Token = bearer note; freely transferable after lockup | | AUM (approx.) | ~$2.4B | ~$830M | ~$740M | | Overcollateralisation | N/A (fund structure) | N/A (fund structure) | Min. 3% first-loss (~10% actual) |

Sources: BlackRock/Securitize offering disclosures; FOBXX summary prospectus (August 2025); Ondo Finance product documentation and blog; rwa.xyz; SEC filings. AUM figures approximate, sourced as of Q2 2026.

Limitation: This comparison is based on publicly available documentation and secondary analysis. ACI has not reviewed the full confidential offering memoranda for BUIDL or the complete term documents for USDY. The evidence establishes structural differences — it does not constitute a complete due-diligence review of any product.

Market Watch

1. Tokenised Treasury products exceeded $7 billion in aggregate AUM in early 2026, up from approximately $850 million two years prior, according to rwa.xyz. DeFi protocols increasingly use these products as reserve collateral and the low-risk leg in structured strategies. When a protocol posts a tokenized Treasury product as collateral, the structural question examined above — what claim does the collateral-poster actually hold? — travels with the token into each downstream position.

2. USDY's published 7-day APY fell to 3.49% in August 2026, down from approximately 4.2% in mid-2026, tracking the decline in short-end US rates. For products backed by the same underlying asset class, yield differences across wrappers primarily reflect fee structures and portfolio composition rather than different government securities.

Committee Question

What legal claim does our allocation represent — a fund share, a registered security, or a debt instrument — and what is the recovery path if the issuing entity fails?

Continue in ACI

ACI's Tokenised RWA module (M7) assesses custody arrangements, legal structure, and redemption mechanics as part of its criterion framework. Explore sample risk indicators to see how ACI structures this analysis.

Explore sample risk indicators → https://aethoncredit.com/explore

Certification Note

The Q3 2026 certification cycle is in progress. Q2-certified indicators remain the current baseline. No Q3 result will be published without explicit CRO certification.