Tokenized money market funds (TMMFs) have grown to nearly $9B, almost multiplying by ten compared with 2023, driven by large asset managers and multi-chain deployments. The Bank for International Settlements (BIS) warns of systemic vulnerabilities arising from the combination of tokenization and stablecoins, in a context of accelerated institutional adoption.
The phenomenon has drawn major asset managers: BlackRock launched BUIDL, which raised more than $240M in its first week and scaled to $2.5B, while Franklin Templeton maintains FOBXX (BENJI) with around $600M in assets. Other active institutions include Goldman Sachs, BNY Mellon, JPMorgan and Circle (USYC), consolidating interest from the traditional financial sector.
TMMFs are on-chain digital representations of money market fund shares, enabling near real-time transfers and fractional ownership. This distributed-ledger architecture allows new forms of issuance, settlement and custody that attract institutional actors.
Initiatives show multi-platform deployments, with Ethereum, Stellar, Solana and Arbitrum among the chains used. Markets such as Hong Kong are pushing the infrastructure: China Asset Management (Hong Kong) launched tokenized funds in RMB and tokenized green bonds and tax exemptions for tokenized ETFs are being explored. Bank of America described tokenization as “mutual fund 3.0”, emphasizing the intent to reconfigure traditional fund operations.
The operational impact includes 24/7 liquidity and faster settlements, which can optimize treasury management; however, institutional adoption requires evaluating custody, interoperability and integration costs with legacy systems, decisive factors to scale these solutions in regulated environments.
Risks, regulation and operational consequences
The BIS has warned of macrofinancial risks: potential “fire sales” of safe assets, greater market fragility and the possibility that stablecoins accelerate the tokenization of real-world assets without sufficient safeguards, amplifying strains during stress episodes.
Banque de France has flagged the vulnerability of DLT to cyberattacks targeting smart contracts; since 2021 significant thefts have been recorded in the crypto-asset sector, underscoring the need to strengthen cyber resilience and technical governance controls.
The risks combine traditional MMF factors —credit, liquidity and interest-rate sensitivity— with new digital fragilities: smart-contract failures, cyberattacks and operational complexity in integrating digital infrastructures with banking systems. This increases the risk of contagion and market concentration if a platform or protocol suffers an incident.
Regulation and governance remain a challenge: authorities seek to fit innovation within the principle “same activity, same risk, same regulatory outcome,” but legal classification and regulatory interoperability are incomplete, creating uncertainty for institutional treasuries and liquidity managers.
