In the latest “Crypto for Advisors” newsletter, Harvey Li from Tokenization Insights discusses the trends in tokenization, money market funds, and institutional adoption as we approach 2026.
Next, in “Ask an Expert,” Michael Sena examines the implications for investors regarding BlackRock’s recent announcements about tokenizing everything from exchange-traded funds (ETFs) to real estate.
– Sarah Morton
The Rise of Tokenized Money Market Funds
Tokenization has transitioned into a significant phase in 2025. Originally an experiment, it is becoming an integral part of institutional frameworks, spearheaded by banks and asset managers who are proactively shaping a tokenized future.
A standout category is tokenized money market funds (MMFs), which are rapidly establishing themselves as the primary on-chain liquidity asset for institutions, treasurers, and advanced funds. They connect traditional short-term U.S. Treasury exposure with digital settlement, programmable processes, and instant portability.
Significant growth is evident:
- Assets under management (AUM) surged from $4 billion at the beginning of 2025 to $8.6 billion by November, marking a 110% increase (RWA.xyz)
- Tokenized MMFs currently account for approximately 3% of the stablecoin market, up from 2% at the year’s start
Institutions are increasingly integrating tokenized MMFs into their operations:
- JPMorgan launched intraday repo functionalities using tokenized collateral facilitated by HQLAx and Ownera
- BlackRock’s tokenized money market fund has been recognized by both OKX and Binance as eligible collateral
- Lloyds Banking Group and Aberdeen Investments executed FX derivative trades utilizing a tokenized money market fund
While momentum continues to grow, the real focus will be on developments in 2026.
Catalysts for Acceleration in 2026
1. Regulatory Approval and Collateral Qualification
The Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee recommended tokenized MMFs for collateral eligibility, with Acting Chair Caroline Pham initiating a specific effort in late 2025 to support the adoption of tokenized collateral.
If tokenized MMFs receive approval as collateral for margin requirements, recognized in cleared derivatives, swaps, and repo, and incorporated into CCP and FCM regulations, they could transition from merely being a cash management tool to essential institutional collateral, similar to the framework that underwrites trillions in daily financing today.
This presents a significant opportunity for banks, brokers, hedge funds, and trading platforms demanding real-time settlement and programmable liquidity.
2. The Moment of “Institutional Legitimacy”
Seventy institutions, including State Street, Fnality, Franklin Templeton, and UBS, contributed to Global Digital Finance’s November 2025 report, showcasing that tokenized MMFs can be:
- Transferred and pledged in real-time across different ledgers
- Supported within existing regulatory frameworks
- Legally enforceable and operationally viable
3. Emergence of Tokenized Cash Rails in Major Banks
Previously, tokenized MMFs could only be redeemed using traditional banking systems or stablecoins, but that is evolving rapidly.
In 2025, we witnessed:
- JPMorgan introduced tokenized deposits and deposit tokens on both private and public chains
- Citi Token Services expanded its offerings of U.S.D and EUR tokenized deposits alongside 24/7 treasury functions
- HSBC and DBS are launching tokenized deposit systems across Asia and Europe
As tokenized cash rails develop, institutions will seamlessly transfer tokenized MMFs to tokenized deposits and settlement cash within the same ecosystem, without friction or reverting to legacy payment methods or stablecoins.
This will signify the transformation of tokenized MMFs from being merely a crypto-adjacent product to becoming fundamental digital liquidity management assets for institutions.
4. Progress in Regulation for U.S.D and EUR Stablecoins
As the infrastructure for tokenized institutional cash grows, stablecoin regulations and policies are facilitating stablecoins to become the primary cash pathway in public, permissionless environments:
- In the U.S., GENIUS Act legislation and related frameworks are drawing U.S.D stablecoins into a clearly defined regulatory scope
- In the EU, MiCA is establishing a comprehensive regulatory structure for e-money tokens and asset-referenced tokens
As these frameworks solidify and small to medium enterprises become more inclined to utilize stablecoins for cash functionalities, tokenized money market funds will naturally emerge as the solution for yield, collateral, treasury, and portfolio cash needs.
Conclusion
The trajectory is unmistakable. Cash that once sat idle in bank accounts or traditional MMF platforms is being reimagined into programmable instruments directly connected to digital asset networks, with tokenized money market funds positioning themselves as the ultimate cash management and collateral solution for all forms of tokenized cash: tokenized bank deposits, deposit tokens, and stablecoins.
2025 marked the year of breakthrough for tokenized money market funds as an asset class. 2026 is set to phase into an acceleration period, where tokenized MMFs will become standard treasury, settlement, and collateral assets for institutions.
– Harvey Li, founder, Tokenization Insight
Ask an Expert
Q: Traditionally, U.S. ETFs adhere to Wall Street’s operating hours and settle through clearing houses. What are the advantages and challenges BlackRock’s investors will encounter with round-the-clock trading?
A: Nonstop trading will alter aspects from staffing to risk management. Continuous markets necessitate operational adjustments. The advantages of real-time markets mean that those who react swiftly will capitalize on the majority of price movements.
Q: The tokenized asset market remains small compared to the trillion-dollar U.S. ETF sector. How will BlackRock’s involvement bolster the tokenization ecosystem?
A: BlackRock’s extensive asset base will instantly elevate the perceived value in the tokenized ecosystem. It also enhances the credibility of all types of blockchain-based assets beyond benchmarks like Bitcoin and Ethereum.
Q: BlackRock’s CEO, Larry Fink, is optimistic about asset tokenization and aims to tokenize nearly every traditional asset. Is this initiative driven by a desire to enhance services for investors, or to maintain its dominance as the largest asset manager?
A: BlackRock clearly recognizes the future of tokenized assets and their inherent benefits: lower operational costs, improved efficiency, and enhanced trust. Much of a large asset manager’s activity occurs behind the scenes in clearing, settlement, and middle-office operations, where blockchain streamlines processes and allows firms like BlackRock to enhance profit margins.
– Michael Sena, chief marketing officer, Recall Labs
