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Fortune
Fortune
Jeff John Roberts

Move over crypto—the latest trend for young investors is...T-Bills

(Credit: Corbis via Getty Images)

I caught up last week with Public.com, an app aimed at beginner investors that offers stocks, ETFs, and other assets along with social media features. Like its competitor Robinhood, Public was a beneficiary of the 2021 meme stock frenzy and offers a window into how younger people (for the most part) like to invest.

I asked the company about the current popularity of crypto, and learned Bitcoin has dropped from the second-most-popular asset on Public to the fourth, while Ethereum has slid all the way from third to 18th. This isn't a huge surprise given the ongoing bear market. But what came as a surprise to me was what Public customers are buying instead: Treasury bills.

According to the company, boring old T-bills have been the most purchased asset on the platform since Public first offered them in March of this year. This was an eye-opener to me since I've always associated Treasuries with either professional bond traders, who sling large stacks of them, or with my late grandmother who grew up in the Great Depression and squirreled them away in a safety deposit box. It's funny to picture novice investors—many of whom were YOLOing their way into GameStop shares two years ago—now buying the safest of bonds.

The appeal is not hard to understand. Right now, Public only offers one flavor of T-bill—the 26-week variety—but it currently offers a fine yield of 5.55%. That's real money for a new generation of investors who came of age when bank accounts offered squat in the way of interest. Meanwhile, T-bills offer an added perk for those who live in places like New York or California since they are exempt from state and local income tax. And while buying the bonds on Public comes with a 0.05% monthly fee—something you don't pay if you buy them directly—it lets users avoid tangling with a government website.

For Public, which has raised $300 million in investment capital, offering T-bills is an obvious win since they are popular with customers and, unlike the meme stock era, there is no risk of amateurs blowing themselves up by purchasing them.

The newfound popularity of T-bills, however, underscores the challenge facing the crypto sector as it anxiously awaits the next bull market. In the past, many people took a flyer on Ethereum or various new blockchains because they offered the hope of real yield. Sure, some of these projects might turn out to be a scam, but they offered huge potential upside at a time when bonds and bank accounts offered almost nothing. That's no longer the case.

All of this means that the pressure on the crypto industry to deliver some real-world use cases is only going to grow. In the past, it was easy to talk up speculation as the first stage of something bigger, but that's not going to work if there are far fewer buyers. It would be ironic indeed if the crypto revolution flounders because too many young investors decide they prefer to buy bonds from Uncle Sam instead.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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