MONEY MARKET MINUTE

Innovation by design: tokenising money market funds

What Are Tokenized Money Market Funds?

Have you ever wished your money could move as quickly as a text message?
In today's increasingly digital world, assets like stocks, bonds and even mutual funds are being transformed through a process called tokenization. One example is the emergence of tokenized money market funds.

But what exactly are they?

On screen: What is a money market fund?

Let's start with what many investors already know.

A money market fund is a type of mutual fund that typically invests in short-term, high-quality investments designed to help manage liquidity and preserve capital.

Many investors use money market funds as a place to hold cash while earning income and maintaining flexibility.

On screen: What does "tokenized" mean?

Now imagine taking ownership of a money market fund and holding that digitally on a blockchain.

That's tokenization.

Rather than only being recorded through traditional financial systems, ownership can also be represented as a digital token that reflects an investor's holdings in the fund. This digital record can make it easier to track ownership and potentially enable new ways of digitally transferring ownership to other qualified investors.

Think of it this way:

A tokenized money market fund is like taking a familiar investment and giving it a digital passport.

The destination stays the same—but the journey may become faster, more connected, and better suited to an increasingly digital financial world.

On screen: What is the value for investors?

Interest in tokenization is growing because investors and financial institutions are exploring ways to make markets more efficient, transparent and connected.

Tokenized investment structures may help support:

Near instant transfers allowing for operational efficiency
Enhanced recordkeeping and transparency
Increased connectivity between traditional finance and digital platforms

These are some of the reasons tokenization is receiving so much attention across the financial industry.

On screen: Does tokenization change the money market fund’s investment strategy?

What's important to remember is that tokenization doesn't change the underlying investments held by the fund or the fund’s overall investment strategy.

A tokenized money market fund still holds the same types of short-term securities as its all money market funds do. The key difference is how ownership is recorded and managed.

Money market funds meet digital innovation

Tokenised money market funds combine the familiar characteristics of regulated money market funds with blockchain-based ownership, bringing traditional cash investments into a digital environment.

Digital ownership enhances connectivity

Fund ownership can be represented as digital tokens on a blockchain, helping streamline recordkeeping and ownership transfers among qualified investors.

Tokenisation may improve efficiency

Tokenised structures may support near-instant transfers, enhanced transparency, and greater connectivity between traditional financial markets and digital platforms.

The investment strategy remains unchanged

While ownership is recorded differently, tokenisation does not alter the underlying portfolio, investment objective, or risk profile of the money market fund.

 We believe payment stablecoins are a critical part of the digital assets ecosystem and have the potential to significantly benefit the economy by transforming payments and enhancing capital market settlements. Stablecoin adoption is accelerating as regulatory clarity improves, with global stablecoin assets currently valued at over $300 billion dollars1 and expected to grow to $1.9 trillion by 2030.2

What are stablecoins?

Stablecoins are typically non-yield bearing digital assets designed to maintain a stable value by “pegging” to a reserve asset such as a fiat currency like the US dollar. Market participants may hold stablecoins to integrate on-chain capabilities into their cash management strategy.

At BlackRock we think of stablecoins as a bridge between traditional finance and digital infrastructure, combining the stability of traditional currencies with the programmability and global reach of blockchain‑based technology.

What do stablecoins enable?

Because stablecoins live and move on blockchain infrastructure, they enable near-instant settlement, 24/7 availability, and programmable payments.

That combination, we believe, makes stablecoins increasingly relevant for businesses, platforms, and payment providers looking to modernize how value moves globally.

 Why stablecoin reserve management matters

We believe effective stablecoin reserve management is fundamental to maintaining stablecoin price stability, liquidity, and trust, particularly as stablecoins scale across global financial markets.

Stablecoin reserves are typically backed by liquid assets, which may include cash and short-term instruments, are managed through regulated money market funds, are essential in supporting price stability and ensuring stablecoins retain a one-to-one parity with their fiat reserve currency, even during periods of market stress. This creates reliable liquidity and efficient settlement, allowing stablecoins to function seamlessly across payments, settlement, and on‑chain liquidity use cases.

Stablecoin providers must be able to allow flexible minting and redeeming of stablecoins while maintaining 1:1 reserve backing, which means their reserve managers need the ability to service subscription and redemption capabilities to align reserves with issued stablecoins.

Additionally, transparent reserve structures, disciplined risk management, scaled operational capabilities, and strong governance frameworks are key to building confidence among institutional users, intermediaries, and issuers.

As regulatory frameworks continue to evolve, robust reserve management plays an important role in supporting alignment with requirements around asset quality, liquidity, and oversight.

Together, these elements underpin long‑term adoption, making institutional‑grade reserve management a key foundation for the continued growth and integration of stablecoins within modern financial markets.

Source: BlackRock.

Want to know more?

Go to www.blackrock.com/cash

In the U.S. this video is intended for public distribution.

A Money Market Fund (MMF) is not a guaranteed investment vehicle. An investment in MMFs is different from an investment in deposits; the principal invested in an MMF is capable of fluctuation and the risk of loss of the principal is to be borne by the investor. A MMF does not rely on external support for guaranteeing the liquidity of the MMF or stabilizing the NAV per share.

Investments in tokens using blockchain involve a high degree of risk, including risks that are different from the risks of investing in traditional assets. These risks include, but are not limited to, risk of regulatory uncertainty, market adoption, market manipulation, market exiting, price volatility and security risk and may expose investors to loss of principal.

Stablecoins are not bank deposits, are not FDIC insured, and are not equivalent to cash or money market fund investments. They involve significant risks including reserve adequacy, de-pegging, issuer default, redemption restrictions, cybersecurity vulnerabilities, and evolving regulatory framework. 

This video is provided for educational purposes only and is not intended to constitute investment advice or an investment recommendation within the meaning of federal, state or local law. You are solely responsible for evaluating and acting upon the education and information contained in this video. BlackRock will not be liable

for direct or incidental loss resulting from applying any of the information obtained from these materials or from any other source mentioned.

There is no guarantee that any forecasts made will come to pass. Reliance upon information in this video is at the sole discretion of the reader.

Prepared by BlackRock Investments, LLC, member FINRA.

©2026 BlackRock, Inc. or its affiliates. All rights reserved. BLACKROCK is a trademark of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners

 

 

Understanding stablecoin reserves

Money market funds are increasingly being used as reserve assets for stablecoins due to their liquidity, transparency, and ability to manage large pools of cash.

Private markets have been rapidly growing in recent years and are projected to grow to more than $20 trillion by 2030. This growth has been bolstered by the continued democratization of private markets and increased accessibility to a broader investor base.

We saw a sharp rebound in private equity deal-making last year after several challenging years of inflation and rising interest rates. Inflation has moderated and interest rates continue to remain elevated.

Private market firms are looking for new ways to stay competitive, and with rates elevated, managers are looking to take a more active approach to cash management strategies.

What are money market funds (MMFs) and how may they be considered in the private markets sector?

MMFs are typically regulated mutual funds that seek to offer capital preservation and same-day liquidity. Private market firms may use MMFs to manage short-term liquidity—such as holding cash between capital calls, fund closings, or investment opportunities.

MMFs are designed to offer liquidity and seek to preserve capital, which may make them a potential option for interim cash management needs.

Investors should evaluate whether MMFs are appropriate for their objectives, risk tolerance, and time horizon, as MMFs are not risk-free and returns are not guaranteed.

Why money market funds play a vital role in private markets

Just released: Private market firms are looking for new ways to stay competitive, and with rates elevated, managers are looking to take a more active approach to cash management strategies.

Learn more Learn more