In today’s Advisor Crypto newsletter, Tokenization Insights’ Harvey Li takes us through tokenization trends, money market funds, and institutional adoption heading into 2026.
Then, on Ask the Expert, Michael Sena explores what this means for investors BlackRock has announced plans to tokenize everything from exchange-traded funds (ETFs) to real estate.
——Sarah Morton
Tokenized Breakthrough Asset Class: Tokenized Money Market Funds
Tokenization enters a new phase in 2025. What started as an experiment is now becoming a functional part of institutional infrastructure, led by banks and asset managers who are not waiting for a tokenized future but are building it.
One specific product category has emerged as the clear frontrunner: tokenized money market funds (MMFs). Tokenized money market funds are quickly becoming the core on-chain liquidity vehicle for institutions, treasurers, and established funds. They connect traditional short-term Treasury risk with digital settlement, programmable workflows and real-time portability.
Growth is real:
- Assets under management (AUM) increased 110% from $4 billion at the start of 2025 to $8.6 billion in November (RWA.xyz)
- Tokenized MMFs currently account for approximately 3% of the stablecoin market, compared with 2% at the beginning of the year
Institutions are incorporating tokenized MMF into their business:
- JPMorgan Enables Intraday Repo Function Using Tokenized Collateral Powered by HQLAx and Ownera
- OKX and Binance both accept BlackRock’s tokenized money market funds as eligible collateral
- Lloyds Banking Group and Aberdeen Investment Plc complete FX derivatives trade using tokenized money market funds
Momentum is building, but the real story is what happens in 2026.
What drives the acceleration? Key Catalysts for 2026
1. Regulatory verification and mortgage qualifications
The Commodity Futures Trading Commission (CFTC) Global Markets Advisory Committee recommended tokenized MMF as eligible collateral, and acting chairwoman Caroline Pham launched a dedicated initiative in late 2025 to drive adoption of tokenized collateral.
If tokenized MMFs were approved as eligible margin collateral, recognized by cleared derivatives, swaps and repurchase agreements, and embedded in the CCP and FCM rulebooks, then tokenized MMFs would evolve from cash parking instruments to core institutional collateral, the same category that drives trillions in daily financing today.
This is a major breakthrough for banks, brokers, hedge funds and trading venues that require intraday settlement and programmable liquidity.
2. The moment of “institutional legitimacy”
70 institutions, including State Street, Fnality, Franklin Templeton and UBS, contributed to the Global Digital Finance November 2025 report and demonstrated that tokenized MMFs can:
- Move and stake in real time across multiple ledgers
- Supported by existing regulatory framework
- Legally valid and operationally sound
3. The rise of tokenized cash rails at major banks
Until recently, tokenized money market funds could only be exchanged through traditional banking channels or stablecoins. This situation is changing rapidly.
In 2025 we see:
- JPMorgan Tokenized Deposits and Deposit Tokens on Private and Public Chains
- Citi Token Services expands USD and EUR tokenized deposits and 24/7 liquidity
- HSBC and DBS are launching tokenized deposit infrastructure in Asia and Europe
As the tokenized cash rail matures, institutions will be able to move tokenized MMFs into tokenized deposits and settled cash within the same ecosystem without any friction or conversion back to traditional payment rails or stablecoins.
By then, tokenized MMF will no longer be a cryptocurrency-related product, but will become a digital liquidity management module for institutions.
4. Regulatory momentum for USD and EUR stablecoins
While tokenized institutional cash rails are rapidly expanding, stablecoin policy and legislation are helping stablecoins become the default cash rail in the public permissionless space:
- In the United States, Genius Act legislation and related frameworks are pushing U.S. dollar stablecoins into clear regulatory territory
- In the EU, MiCA provides a complete regulatory regime for e-money tokens and asset reference tokens
Once these frameworks are ironed out and SMEs become more willing to leverage stablecoins for cash, tokenized money market funds will naturally emerge as yield, collateral, treasury and portfolio cash solutions.
bottom line
The direction of travel is clear. Cash that used to live in bank accounts or traditional MMF portals is now being repackaged into programmable instruments that plug directly into digital asset rails, and tokenized money market funds are becoming the cash management and collateral solution for all forms of tokenized cash: tokenized bank deposits, deposit tokens, and stablecoins.
2025 is a breakout year for tokenized money market funds as an asset class. 2026 appears to be an acceleration phase where tokenized money market funds will become the standard treasury, settlement and collateral asset for institutions.
– Harvey Li, founder of Tokenization Insight
Ask the experts
Q: Traditionally, U.S. ETFs have followed Wall Street’s market hours and settled through its clearing houses. What benefits and obstacles will BlackRock investors face in trading around the clock?
one: 24/7 trading will change everything from staffing to risk management. When the market never closes, it changes the way you need to operate. The benefit of real-time markets means that those who are able to react first will be able to capture the majority of moves in asset prices.
Q: The market for tokenized assets is still tiny compared to the trillion-dollar U.S. ETF industry. How will BlackRock’s participation contribute to the tokenization ecosystem?
one: BlackRock’s vast portfolio of assets will immediately increase the overall value represented by the tokenized ecosystem. More importantly, it brings credibility to all types of blockchain-based assets except Bitcoin and Ethereum.
Q: BlackRock CEO Larry Fink has been bullish on asset tokenization and wants to tokenize almost all traditional assets. Is tokenization to provide better services to investors or to maintain its hegemony as the largest asset manager?
one: BlackRock clearly sees the future of tokenized assets and all the benefits they bring: reduced operational overhead, increased efficiency and increased trust. Much of the business of large asset managers is not in the front-end market, but in clearing, settlement and other types of back- and middle-office operations. Blockchain streamlines these processes and enables companies like BlackRock to increase profit margins
– Michael Sena, Chief Marketing Officer, Recall Labs
