MONEY MARKET MINUTE
Innovation by design: tokenizing 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
Tokenized 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.
Tokenization may improve efficiency
Tokenized 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, tokenization 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.
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.
The next evolution of cash investing
Tokenized money market funds combine traditional MMF structures with digital infrastructure. Explore how tokenization can enhance operational efficiency while maintaining the investment objectives, governance and regulatory framework investors know and trust.
A liquidity fund built for the digital dollar ecosystem
The BlackRock Select Treasury Based Liquidity Fund (BSTBL) is a next‑generation liquidity solution for the digital dollar era. BSTBL invests in highly liquid assets to back stablecoins 1:1, aligns with the GENIUS Act1, and supports education through revenue contributions2.
What are money market funds?
Everyone has a need for cash. But cash can mean different things to different people.
Comfort in times of stress, an opportunity for growth.
After all, there is always a need for cash and for cash management, many investors rely on money market funds.
What are money market funds?
Money market funds are mutual or pooled funds that seek to invest in high-quality, short-term debt instruments, helping you to achieve the opportunity of liquidity with a low level of risk.
How do they seek to deliver this? Let's find out.
In general, there are three core objectives of money market funds: stability, liquidity, and yield.
Stability. To seek the stability of principle, the funds may invest in highly-rated short-term bonds such as Treasury bills, certificates of deposit, and repurchase agreements. The types of eligible investments will differ depending on the type of money market fund.
Liquidity. Short-term money market funds may trade and settle on a same day basis, seeking to provide you with convenient access, operational ease, and liquidity.
Yield. There is a spectrum of types of money market funds. You can choose to have a more conservative exposure, such as to only government risk or to a broader pool of money market securities, such as short-term debt from highly-rate issuance. You can also opt for funds that seek to drive positive social outcomes.
So, whatever cash means to you, we know that cash management matters and money market funds are a cash management solution.
What are money market funds?
Everyone has a need for cash, but cash can mean different things to different people. Money market funds are designed to prioritise liquidity, stability and yield - in that order.
A Fed of few words
The second quarter was defined by a steady Federal Reserve, persistent inflation concerns and strong demand for short-term investments. Explore how changing policy expectations, Treasury supply dynamics and money market fund flows influenced the cash landscape - and what they could mean for investors in the months ahead.
Growing with your country: Thoughts from a long-term optimist
In his 2026 Chairman’s Letter to Investors, Larry Fink explores how long-term investing can help more people share in their country’s growth as geopolitical change and AI are reshaping the global economy.
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