- Tokenized US and Non-US treasuries added $2.12 billion in market cap in the first two months of 2026, while stablecoins are lagging behind with a $1.19 billion increase.
- Q1 2026 is already on track to become the strongest quarter for tokenized treasuries on record.
- Yield-bearing stablecoins dominate in stablecoin supply growth in 2026, partially offsetting billions in losses from USDT and USDC.
Stablecoins have historically dwarfed tokenized treasuries by most measures, and their quarterly supply expansion regularly reached tens of billions. However, in Q1 2026 so far, the tokenized treasury market added $2.12 billion in market cap, while stablecoins added just $1.19 billion. For the first time ever, tokenized treasuries are growing faster than stablecoins in absolute terms.
So what changed?
Note: Q1 2026 data is through February 24, 2026.
The Market Turned Cautious and Yield Became the Answer
Crypto markets have been grinding through a difficult period, and investors are responding by rotating toward assets that offer more stability and predictable returns. Tokenized treasuries fit that profile almost perfectly: they are backed by U.S. government debt and generate real yield, which has even ticked up slightly this year.
Tokenized treasuries currently show eight consecutive quarters of expansion. Moreover, although we are only mid-quarter, Q1 2026 is already on track to become the strongest quarter for tokenized treasuries on record. This indicates that demand is not only sustained, but also accelerating.
As such, since the start of 2024, tokenized U.S. treasuries have grown from $750 million to nearly $11 billion — a roughly 15x increase. Non-U.S. treasuries followed a similar trajectory, surging from just $13 million to over $1 billion over the same period.
Notably, non-U.S. treasuries have been steadily increasing their footprint within the tokenized treasuries market. Their share of total market cap has expanded from roughly 1% two years ago to nearly 9% today, signaling gradual diversification beyond U.S bonds.
Stablecoin Supply Is Shifting Towards Yield As Well
Stablecoin supply is currently showing its worst dynamics in years. In the first two months of 2026, Ethereum has already lost more than $8 billion in stablecoin supply — the worst result since Q2 2022. In turn, USDT and USDC lost $3.2 billion and $0.5 billion in supply, respectively, so far this year.
By conventional measures, this would signal a sector in retreat. But total stablecoin supply has barely changed in the aggregate, because the market is restructuring around yield.
Among the stablecoins posting the largest absolute supply gains in 2026, yield-bearing assets such as USDY, sUSDS, USYC, and syrupUSDC lead the pack. Other top performers are also closely linked to yield-generating mechanisms. USDS, for instance, largely serves as an entry point to sUSDS, while USD1 has benefited from the launch of World Liberty Markets, which expanded its DeFi utility and yield access. So even where the yield is indirect, it is clearly driving adoption.
As a whole, yield-bearing stablecoins showed a 5% increase in 2026 so far, becoming the best-performing segments in the stablecoin sector right now.
What This Signals For the Industry
During bull markets, stablecoins thrive as liquidity vehicles, sitting on the sidelines of active speculation. In a more cautious environment, idle capital has a cost, and both protocols and users are looking for on-chain instruments that work harder. If bearish conditions persist, yield-bearing stablecoins and tokenized treasuries are well-positioned to keep expanding as investors seek stability and consistent returns.
The growth of yield-bearing assets is already registering beyond crypto markets. In Washington, stablecoin yield has become one of the more contentious topics in ongoing U.S. crypto legislation. Specifically, it’s about whether centralized exchanges should be allowed to pay yield on stablecoin balances, a model that banks see as a direct threat to their deposit business. That debate is narrower than what the DeFi-native yield products covered here represent, but it reflects the same underlying shift: yield on crypto assets is no longer a niche feature, it is becoming an expectation — and one that traditional finance is taking seriously enough to push back on through legislation.
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