Tokenized Treasuries are among the lowest-risk assets in the RWA space, but "lowest-risk" is not "risk-free." The underlying asset - US government debt - carries minimal credit risk, which is why these are considered safe. The risks that remain live in the wrapper around that debt: the custodian holding the Treasuries, the smart contract issuing the token, and the mechanism for redeeming your money. Understanding those is the difference between a product that is genuinely as safe as it sounds and one that merely borrows the word "Treasury."

The part that is genuinely safe

The holdings. Short-term US Treasuries are backed by the US government and are about as safe as a dollar asset gets, so the credit risk of the money itself is minimal. A well-run tokenized Treasury inherits that safety. This is why the category is the conservative corner of RWA and the usual on-ramp for cautious investors.

So if someone asks whether the Treasuries behind the token are safe, the answer is yes. The real question is whether the structure reliably connects you to them.

The risks the wrapper adds

Three sit on top of the safe asset.

First, custody: the Treasuries must actually be held, in full, by a qualified custodian on your behalf - not commingled or lent out undisclosed. Proof of reserves or audited holdings are how you verify this. Second, smart-contract risk: the token is software, and a flaw could lock or misdirect funds. Favor audited contracts and established issuers. Third, redemption risk: your ability to convert tokens back to dollars depends on the redemption mechanism working, especially under stress - check the terms and any delays.

Counterparty and peg considerations

There is also counterparty risk: the issuer, the fund manager, or a partner failing to perform. Regulated issuers with registered funds reduce this, which is part of why names like Franklin Templeton and BlackRock dominate. And while these tokens aim to track ~$1 or a steadily rising value, their price can briefly deviate on secondary markets in stressed conditions - usually minor, but worth knowing.

What this looks like in the real products

The reason regulated issuers dominate this category is that they wire these checks in by default. BlackRock's BUIDL, for example, holds its assets with BNY Mellon as custodian and uses Securitize as the registered transfer agent - so the custody and recordkeeping risks are handled by named, regulated firms rather than the token contract alone. Franklin Templeton's BENJI runs the same way, with the public blockchain acting as the official share register behind a registered fund. When you see that kind of structure, the wrapper risks are real but contained.

The peg-deviation risk is not hypothetical, either. In March 2023, when Silicon Valley Bank failed, the stablecoin USDC - which held part of its reserves there - briefly traded down to around $0.87 before recovering once US regulators backstopped the bank's deposits. That episode is the template for how a dollar-pegged on-chain token can wobble not because the underlying asset went bad, but because a counterparty around it did. A tokenized Treasury is exposed to the same kind of event through its custodian and banking partners, which is exactly why "who holds the money" is the question that matters most.

How to judge a specific product

Run a short checklist: Is the issuer regulated and the fund registered? Does a named qualified custodian hold the Treasuries, with proof of reserves or audits? Is the smart contract audited? Are the redemption terms clear and tested? The more of these a product satisfies, the closer its real safety is to the safety of the Treasuries inside it.

Done well, a tokenized Treasury is a sensible place to earn low-risk yield on-chain. Done poorly, it is a risky wrapper around a safe asset - and the label alone will not tell you which you are holding. For the broader picture of how RWA losses happen, see the ways you can lose money.

Where to go next

• Next: how to earn yield on stablecoins safely.
• The full risk map: the ways you can lose money.
• Glossary: proof of reserves.

Sources: rwa.xyz; U.S. SEC (sec.gov); issuer disclosures, as of 2026.