JPMorgan: Tokenized MMFs Unlikely to Exceed 15% of Stablecoins

JPMorgan analysts led by managing director Nikolaos Panigirtzoglou report that tokenized money market funds account for roughly 5% of the stablecoin market cap and are unlikely to exceed 10–15% unless rules change.

The report says stablecoins remain the dominant cash instrument in crypto because they are widely used for collateral management, trading, settlement, cross-border payments and day-to-day liquidity on centralized exchanges and decentralized finance platforms. Tokenized money market funds are typically treated as securities and therefore face registration, disclosure, reporting and transfer limits that make onchain circulation harder.

The note identifies two main user groups for tokenized funds: crypto-native investors seeking yield on idle balances, and institutional investors seeking operational benefits such as faster settlement, programmable shares and blockchain recordkeeping while keeping traditional investor protections. Some firms have created arrangements that let institutions post tokenized fund shares as off-exchange trading collateral while underlying assets remain in regulated custody, enabling the value to be represented inside trading venues.

Regulatory action has been limited. The analysts point to a Securities and Exchange Commission process introduced earlier this year to streamline issuance of onchain money market funds and simplify redemptions for funds using blockchain recordkeeping. The report calls those changes and custody-based collateral arrangements marginal improvements that do not remove the core regulatory constraints.

“We doubt that tokenized money market funds would grow beyond 10%–15% or so of the stablecoin universe, unless there is a regulatory change that reduces the structural disadvantage arising from tokenized money market funds classified as securities,” the analysts wrote.

The analysts expect tokenized funds to grow faster than stablecoins because they offer yield, but they do not expect that growth to alter the market split without regulatory reform. They say tokenized funds will likely find niches among institutions that value custody and compliance frameworks.