Stellar has become the leading public blockchain for tokenized non-US government debt, hosting approximately $490 million in such assets, according to the latest on-chain data. The milestone highlights a broader shift in real-world asset (RWA) tokenization, as blockchain-based financial markets extend beyond US government securities and dollar-denominated stablecoins.

Stellar has held the top position in this segment since February, with its holdings of tokenized sovereign debt issued outside the United States exceeding those recorded on any other public blockchain network. The growth points to rising institutional interest in using blockchain infrastructure to issue, hold and transfer government debt denominated in currencies other than the US dollar. For scale, the on-chain figure is a small slice of a global public debt stock that the International Monetary Fund estimated would pass $100 trillion in 2024, underscoring how early the tokenized segment remains.

Institutional demand drives tokenized debt growth

Fund managers and institutional custodians have increasingly turned to Stellar for debt securities denominated in euros, British pounds and other local currencies. The trend mirrors the international character of government and corporate finance, in which many issuers outside the United States operate primarily in their domestic currencies rather than dollars.

Stellar currently hosts roughly $490 million in tokenized non-US government debt, placing it first among public blockchains in this specialized segment. The network has also posted strong issuance growth since February, with new tokenized debt offerings reportedly outpacing competing Layer-1 networks that target real-world financial assets. Part of the draw is track record: Stellar was the public blockchain on which Franklin Templeton's tokenized US government money market fund processed transactions and recorded share ownership, becoming the first US-registered fund to use a public blockchain for that purpose after integrating Stellar in 2021.

The expansion suggests that blockchain-based debt markets are moving toward a more geographically diverse structure. Instead of concentrating predominantly on US Treasuries, issuers and financial institutions are increasingly exploring digital representations of sovereign debt from Europe, Latin America, Asia and other regions.

Benefits for issuers and asset managers

Tokenizing sovereign debt on a blockchain can reduce some of the operational barriers associated with international settlement and correspondent banking arrangements. Blockchain-based infrastructure allows transactions to operate continuously, including outside traditional banking hours, while programmable features can support compliance and settlement requirements.

Asset managers can potentially benefit from faster settlement through stablecoin-based transactions, while issuers may reduce some of the expenses and administrative requirements involved in launching new financial instruments. The stablecoin leg of that workflow gained a clearer legal foundation in the European Union with the Markets in Crypto-Assets (MiCA) regulation, which has fully applied since the end of 2024 and sets uniform rules covering euro-denominated stablecoins among other tokens. Exchanges and custodians are also expanding their capabilities to support investment products originating from multiple regions, a development that could help establish more interconnected markets for tokenized debt as institutional adoption increases.

For developers, Stellar's relatively low transaction costs and compliance-oriented infrastructure have contributed to its appeal among companies building regulated financial products.

Real-world asset tokenization refers to the process of representing ownership of or claims on physical or financial assets through blockchain-based digital tokens. In the case of government debt, tokenization creates digital representations of securities that may be transferred and managed through blockchain infrastructure.

Regulation and interoperability remain key challenges

The development of tokenized sovereign debt is also being influenced by regulatory changes in major financial markets. In the European Union, the DLT Pilot Regime has applied since March 2023, creating a dedicated framework for trading and settling tokenized securities on regulated market infrastructure, while the United Kingdom has followed with a Digital Securities Sandbox run jointly by the Bank of England and the Financial Conduct Authority. Together these regimes could provide additional support for blockchain-based financial instruments.

Ethereum and Polygon are also competing for a larger share of the real-world asset market — Ethereum hosts BlackRock's USD Institutional Digital Liquidity Fund, a tokenized Treasury-based fund launched in 2024 — but Stellar's early momentum in non-US sovereign debt has helped it establish a strong position.

Future growth will depend heavily on reliable reserve verification, deeper secondary-market liquidity and cross-chain interoperability that allows tokenized assets to operate across different blockchain networks. These areas remain important because institutional investors require confidence that tokenized securities accurately represent underlying assets and can be traded efficiently. Greater liquidity could also make tokenized government debt more attractive to a wider range of investors.

Cross-chain standards may become increasingly important as financial institutions seek to avoid being locked into a single blockchain ecosystem. Interoperability could allow tokenized securities to move between compatible networks while preserving compliance and transaction records.

The continued expansion of tokenized non-US government debt therefore represents a significant development in the broader real-world asset market. Stellar's current lead indicates that blockchain-based financial infrastructure is increasingly being used for global debt markets rather than remaining concentrated around US government securities and dollar-based assets.