In today’s Crypto for Advisors newsletter, Harvey Li of Tokenization Insights walks us through tokenization trends, money market funds, and institutional adoption as we approach 2026.
Then, in “Ask an Expert,” Michael Sena examines what this means for investors with BlackRock has announced plans to tokenize everything from exchange-traded funds (ETFs) to real estate.
-Sarah Morton
Tokenization Breakout Asset Class: Tokenized Money Market Funds
Tokenization entered a new phase in 2025. What started as an experiment is now becoming a functioning part of institutional infrastructure, led by banks and asset managers who aren’t waiting for a tokenized future: they’re building it.
One specific product category has emerged as the clear favorite: tokenized money market funds (MMFs). Tokenized money funds are quickly becoming the primary on-chain liquidity instrument for institutions, treasurers, and sophisticated funds. They bridge traditional short-term exposure to the U.S. Treasury with digital settlement, programmable workflows, and real-time portability.
Growth is real:
- Assets under management (AUM) increased from $4 billion at the start of 2025 to $8.6 billion in November, an increase of 110% (RWA.xyz)
- Tokenized MMFs now represent ~3% of the stablecoin market compared to 2% at the start of the year
And institutions are integrating tokenized MMFs into companies:
- JPMorgan went live with intraday repo capabilities using tokenized collateral powered by HQLAx and Ownera
- BlackRock Tokenized Money Market Fund Accepted by OKX and Binance as Eligible Collateral
- Lloyds Banking Group and Aberdeen Investments completed foreign exchange derivatives transactions using a tokenized money market fund.
The dynamic is taking shape, but the real story is what follows in 2026.
What drives the acceleration? Key enablers for 2026
1. Regulatory validation and eligibility of guarantees
The Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee has recommended tokenized money market funds as eligible collateral, and Acting Chair Caroline Pham launched a dedicated initiative in late 2025 to advance the adoption of tokenized collateral.
If tokenized money market funds are approved as eligible margin collateral, recognized for cleared derivatives, swaps and repos, and integrated into the CCP and FCM rules, then tokenized money market funds evolve from a liquidity parking tool to a core institutional guarantee, the same category that powers trillions in daily funding today.
This is a major advancement for banks, brokers, hedge funds and trading platforms that need intraday 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 and demonstrated that tokenized money funds can be:
- Moved and promised in real time across multiple ledgers
- Supported by existing regulatory frameworks
- Legally enforceable and operational
3. The rise of symbolic liquidity in major banks
Until recently, tokenized monetary funds could only be redeemed via traditional banking rails or stablecoins. This is changing quickly.
In 2025, we saw:
- JPMorgan tokenized deposits and deposit tokens on private and public chains
- Citi Token Services has expanded USD and EUR tokenized deposits and 24/7 cash flow.
- HSBC and DBS activate tokenized deposit infrastructure in Asia and Europe
As tokenized cash rails mature, institutions will be able to move tokenized monetary funds to tokenized deposit and settlement cash within the same ecosystem, without friction and without conversion to existing payment rails or stablecoins.
This is when tokenized money funds stop being a crypto-adjacent product and become digital liquidity management blocks for institutions.
4. Regulatory dynamics for USD and EUR stablecoins
As tokenized institutional cash rails grow rapidly, stablecoin policy and legislation are helping stablecoins become the default cash rail for the permissionless public space:
- In the United States, the GENIUS Act legislation and associated frameworks push USD stablecoins within a defined scope of supervision.
- In the EU, MiCA provides a comprehensive regulatory regime for e-money tokens and asset-referenced tokens.
Once these frameworks take hold and SMEs become more comfortable with using stablecoins for treasury purposes, tokenized money market funds naturally become the solution for yield, collateral, cash flow and portfolio treasury.
The essentials
The direction of travel is clear. Cash that previously sat in bank accounts or legacy MMF portals is now repackaged into programmable instruments that connect directly to digital asset rails, and tokenized money market funds become the cash management and collateralization solution for all forms of tokenized liquidity: tokenized bank deposits, custodial tokens, and stablecoins.
2025 was the breakthrough year for tokenized money market funds as an asset class. 2026 appears to be the acceleration phase, when tokenized money funds become a standard treasury, settlement and collateral asset for institutions.
– Harvey Li, founder, Tokenization Insight
Ask an expert
Q: Traditionally, US ETFs follow Wall Street market times and are settled through their clearinghouses. What are the advantages and obstacles that BlackRock investors will face in terms of 24-hour trading?
A: 24/7 trading will change everything from staffing to risk management. When markets never close, it changes the way you have to operate. The advantages of real-time markets mean that those who can react first will be able to capture the bulk of asset price movements.
Q: The token asset market is still insignificant compared to the trillion-dollar US ETF industry. How will BlackRock’s participation contribute to the tokenization ecosystem?
A: BlackRock’s massive portfolio of assets will instantly increase the overall value represented by the tokenized ecosystem. Additionally, it brings credibility to all types of blockchain-based assets beyond Bitcoin and Ethereum.
Q: BlackRock CEO Larry Fink has been optimistic about asset tokenization and wants to tokenize almost all traditional assets. Is tokenization a move to offer better services to investors or to maintain hegemony as the largest asset manager?
A: BlackRock clearly sees the future of tokenized assets and all the benefits they bring: reduced operational costs, increased efficiency and more trust. The majority of a large asset manager’s business is not in front-to-face markets, but is in clearing, settlement and other types of back and middle office operations. Blockchain streamlines these processes and allows someone like BlackRock to increase their profit margin
– Michael Sena, Marketing Director, Recall Labs
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