Tokenised money market funds: On-chain yield, off-chain constraints

For most of their history, money market funds have been one of the least eventful corners of finance. Corporate treasurers, asset managers and banks use them to park cash, earn a return close to short-term interest rates, and withdraw it when needed. That reliability is why the instrument now sits at the center of one of the more consequential changes in digital assets. A share in a money market fund can now be recorded as a token, held in a wallet, and transferred between approved investors at any hour.

This change is gaining scale. The European Central Bank estimated tokenised money market funds at about EUR 7 billion in early 2026, after growth at roughly 110% in 2025. Over the same year stablecoins grew about 49%, and traditional European money market funds contracted. On a broader measure that includes comparable Treasury products, RWA.xyz reported more than USD 14.7 billion in October 2026. Some of the world’s largest asset managers now offer tokenised shares, alongside newer issuers built for blockchain markets.

The appeal is practical rather than speculative. For a crypto-native institution, a tokenised fund offers a way to earn a government-linked yield without leaving the blockchain environment in which it settles trades. For a traditional treasury, it offers faster movement of collateral and fewer steps between holding cash and deploying it. Rules in the United States and the European Union prevent stablecoin issuers from paying interest, which leaves tokenised funds as one of the routes to earning a return on on-chain cash.

Yet a similar yield and a token in a wallet can conceal very different products. Some funds hold only government debt, while others lend to banks and companies. Some keep the token at one dollar and pay income in new units, while others let the price rise. Some are open only to qualified investors in particular jurisdictions, and some instruments presented alongside funds are not funds at all. A token can also move at midnight on a Sunday, while the fund behind it still redeems only on business days.

Choosing the right token therefore matters more than choosing the highest yield. Behind a similar return and a familiar $1 price, each product makes its own choices about what it holds, how it pays, who can own it and how quickly it turns back into cash. For institutional investors, the question is no longer whether tokenised money market funds work, but which one fits their mandate, eligibility and need for cash.

The return on a tokenised money market fund comes from the instruments it holds. Funds focused on government debt typically combine Treasury bills with cash and repurchase agreements, earning income from lending while keeping money available for redemptions.

US Treasury bills provide one source of that income. A fund generally buys them below face value and receives the full amount at maturity, earning the difference. Through reverse repurchase agreements, it can also lend cash against government securities as collateral, often overnight.

The same approach extends beyond the United States. Spiko’s euro fund, for example, invests in debt issued by eurozone governments. The choice between these exposures determines both the currency of the investment and the interest rates that influence its return.

The blockchain determines how fund shares move between wallets; the investment mandate determines where the income comes from and which exposures accompany it.

Tokenised money market funds may present similar yields and continuous transferability, yet their underlying design can differ by:

1. Source of income

Government mandates earn from Treasury bills, cash and government-collateralised repurchase agreements (BUIDL, for example), so interest-rate risk predominates. Broader liquidity mandates also lend to banks and corporates through deposits and commercial paper (as sterling LVNAV funds do), introducing credit exposure behind a comparable yield.

2. Income distribution

Constant-value funds maintain a one-dollar token and distribute income through additional units (e.g. BUIDL monthly, BENJI daily). Accumulating funds hold the unit count fixed and reflect income in a rising net asset value (e.g. Spiko’s T-Bills funds, USYC and uMINT).

These are distinct contracts with different implications for accounting, taxation and collateral treatment. In constant-value structures, income accrued between distribution dates may not transfer with tokens sold in the secondary market.

3. Legal claim and eligibility

Products from a single manager may sit in separate legal vehicles with different investor eligibility requirements (e.g. BENJI and iBENJI). Some instruments presented alongside funds are debt obligations rather than fund shares (e.g. USDY). The register model also varies: the blockchain may serve as the official register (e.g. Spiko), as one record under transfer-agent control (e.g. BENJI), or as a reconciled secondary record (e.g. WTGXX).

4. Conversion to cash.

Continuous token transfer does not imply continuous redemption. Fund dealing remains subject to business days and cut-off times set by the underlying markets (e.g. BUIDL’s redemption cut-off is 3:00 p.m. New York time). Immediate liquidity offered outside this window relies on an intermediary’s balance sheet and carries counterparty risk. Collateral use requires reliable valuation and acceptance of transfer restrictions.

For institutional investors, the considerations are therefore mandate, eligibility, legal record and redemption terms, not just quoted yield or market capitalisation.

Investors approach tokenised funds with different requirements. An institution managing dollar collateral may prioritise eligibility and settlement arrangements. Another may need access through a registered fund. A company meeting expenses in euros or Hong Kong dollars may prefer income in the same currency.

The three groups below help distinguish between those choices. They describe routes into the market rather than mutually exclusive legal categories: a fund established outside the United States can still invest in US Treasury bills.

Source: rwa.xyz, AMINA Bank

*USDY is best viewed separately from the other categories. Unlike money market funds, it is a secured note backed by US Treasuries and bank deposits, providing investors with a contractual debt claim, targeting similar dollar savings and treasury use cases.

This group comprises privately offered funds and offshore vehicles investing in US Treasury instruments. “Private” describes the offering’s access restrictions; “offshore” describes its domicile relative to the United States.

For investors, the practical distinction among the following options lies in onboarding. These products may require institutional status, a qualifying level of investment or a minimum subscription. Their documents also determine where issuers can offer shares and which investors may receive transfers.

Source: rwa.xyz, AMINA Bank

BUIDL, USYC and iBENJI together represent approximately 78% of the private/offshore values. USYC represents shares in a Cayman Islands fund investing in Treasury bills and reverse repurchase agreements, with access restricted to eligible non-US persons.

US-registered government money market funds bring an established cash-management structure to blockchain distribution. Their governing framework sets requirements for portfolio composition, liquidity, valuation and disclosure. Under Rule 2a-7, government funds must invest at least 99.5% of their assets in cash, government securities or fully collateralised repurchase agreements.

This route matters to investors seeking fund access without the qualified purchaser requirements of a private institutional offering. Access still depends on the product, platform and investor’s jurisdiction.

For example, Franklin Templeton launched BENJI in 2021, demonstrating how blockchain can be integrated into the ownership record of a registered money market fund. WisdomTree’s WTGXX takes a different approach, maintaining the official shareholder registers in traditional book-entry form while using blockchain as a reconciled secondary record. Both models support 24/7 secondary-market trading through separate arrangements.

For investors outside the United States, currency can matter as much as the fund structure. A business setting aside euros for payroll may prefer euro-denominated government debt to a dollar investment whose exchange rate can change before payment falls due.

Source: rwa.xyz, AMINA Bank

Spiko’s euro fund may serve that purpose through eurozone government debt. ChinaAMC’s Hong Kong dollar fund invests in deposits and money market instruments, giving investors a different currency and credit exposure.

Non-US distribution does not necessarily mean non-dollar exposure.

UBS launched uMINT in November 2024 on Ethereum through authorised distribution partners, following its work in MAS’s Project Guardian. It illustrates how managers can deliver dollar money market exposure through distribution arrangements outside the United States.

The following sections examine the market leaders in greater detail.

At approximately $2.2 billion in October 2026, BlackRock’s BUIDL ranks among the largest tokenised funds in the category. It operates as a BVI professional fund for qualified purchasers, investing in cash, US Treasury bills and repurchase agreements. Each token represents one share, with a target value of $1.

BUIDL separates the share price from the income it earns. Dividends accrue daily and reach investors’ wallets monthly as additional tokens. A hypothetical holding of 100,000 tokens that earns $400 over a distribution period therefore becomes 100,400 tokens after reinvestment at $1.

Until that distribution, the token balance shows the shares held but not the income awaiting payment. When investors transfer shares or pledge them as collateral, the accounting must distinguish those shares from the income attributable to their holding period. The $1 target simplifies valuation, although it does not guarantee capital preservation.

Investors can transfer BUIDL around the clock between approved wallets. Securitize, the transfer agent, verifies investors and administers the ownership record; the token’s transfer controls prevent delivery to addresses outside the allowlist. BNY Mellon holds the underlying assets and provides fund administration, separating custody of the investment portfolio from custody of the tokens.

Franklin Templeton’s BENJI represents shares in the Franklin OnChain U.S. Government Money Fund, a US-registered fund that targets a $1 share price. Its registration and distribution arrangements make it accessible to a broader investor base than private funds requiring qualified purchaser status.

BENJI uses blockchain records to connect ownership with income allocation. Franklin distributes dividends on-chain daily, including weekends and holidays, while its intraday-yield feature calculates entitlement according to the time an investor holds the shares.

An investor who transfers shares during the day can therefore retain the income earned before the transfer, while the recipient earns income for the subsequent holding period. This becomes useful when shares move between investors or support transactions during the day: the income calculation follows the capital’s actual use.

The transfer agent maintains the official ownership record through Franklin’s blockchain-integrated system. Public networks record transaction activity, while the agent connects wallet balances with investor identities and handles shareholder servicing. The arrangement brings fund administration and wallet transfers into the same process.

iBENJI represents a separate fund, the Franklin OnChain Institutional Liquidity Fund Ltd, with approximately $1.7 billion in marketcap. It serves institutions through a private offering. Although both products use Franklin’s technology, their eligibility requirements and governing terms differ.

Spiko’s US and EU T-Bills funds’ accumulating share classes retain investment income within the fund, while their variable net asset value reflects the portfolio’s assets and liabilities. Investors may consequently hold the same number of tokens as the value of their investment changes.

These are two separate features working together. Accumulation determines where income goes; variable NAV determines how the fund prices its shares.

For example, 100,000 tokens moving from $1 to $1.004 produce a $400 increase in value without adding tokens to the investor’s wallet. A treasury dashboard or collateral platform must therefore combine the token balance with the applicable NAV to calculate the holding’s value.

Spiko records shares on public distributed ledgers and permits transfers between approved addresses. Its fund documents establish the valuation schedule and redemption terms, connecting the on-chain ownership record with the processes used to manage the portfolio.

Those schedules become relevant when shares move outside business hours. A weekend transfer may update ownership while the latest published NAV still reflects a business-day calculation. A platform accepting the shares must account for when that valuation was calculated and when the investor can transact with the fund.

For Spiko, delivering NAV data is therefore part of making the shares usable. The token records how much an investor owns; the valuation establishes what that holding represents in euros or dollars.

The regulatory question extends beyond permission to issue a token. A usable investment also needs recognised ownership, authorised distribution, custody arrangements and a lawful way to trade or redeem.

In the United States, the SEC staff’s January 2026 statement distinguishes securities tokenised by their issuer from arrangements created by an unaffiliated third party. That distinction matters when a token provides exposure to an investment without directly representing the issuer’s security. The statement expresses staff views rather than creating a new rule, but it reinforces a practical principle: investors must identify the rights attached to the token itself.

For money market funds, pricing rules also influence design. A registered government fund may seek a stable share price within Rule 2a-7’s requirements. A privately offered Treasury fund can target the same price without becoming a registered government money market fund. Matching prices therefore does not establish matching regulatory protections.

Europe similarly regulates the investment according to its substance. MiCA excludes tokens that qualify as financial instruments; fund shares remain subject to the applicable fund and securities framework. The EU Money Market Fund Regulation separately governs portfolio, valuation and liquidity requirements. Tokenisation must accommodate those conventions, including variable NAV and the conditions under which funds may maintain a constant dealing price.

The implication is that continuous liquidity requires someone to fund it. Technology coordinates the exchange, but a dealer, liquidity provider or fund facility supplies the assets.

Stablecoin regulation adds another boundary. MiCA’s interest restrictions for e-money tokens and the GENIUS Act’s restrictions on issuer-paid yield distinguish payment instruments from investments earning portfolio income. A tokenised fund can supply the investment component, while a stablecoin supplies the payment component; each retains its own rules.

The opportunity lies in making these components work together: recognised fund ownership, income accounting, eligible counterparties and settlement backed by available liquidity. That is what turns a transferable share into an asset institutions can use.

Tokenised money market funds’ usefulness depends on how the investment, and its digital representation operate together.

Stable-price funds deliver income separately, while accumulating share classes incorporate it into share value. Eligibility rules determine who can participate, and ownership records connect wallet balances to recognised investment rights. Redemption facilities then connect those holdings to the currency investors need for payments or settlement.

These differences explain why the category supports several models. For a corporate treasury, a trading institution or an individual investor, the value lies in choosing a product whose income, access and liquidity arrangements fit the intended use, eligibility, and risk evaluation.

What are tokenised money market funds?

Tokenised money market funds use blockchain-based tokens to represent fund shares. The underlying fund invests in short-term assets according to its mandate, while the token provides a digital way to record, hold and transfer the investment.

What assets do tokenised money market funds invest in?

Government-focused funds typically invest in Treasury bills, cash and repurchase agreements backed by government securities. Broader money market funds may also hold bank deposits, certificates of deposit and commercial paper. Each fund’s mandate defines its permitted investments.

How do tokenised money market funds pay income?

Some distribute income as cash or additional fund shares. Others offer accumulating share classes that retain income within the fund, contributing to the value of each share. Investors should distinguish how frequently income accrues from when the fund distributes it.

What is the difference between constant NAV and variable NAV?

A constant net asset value fund aims to maintain a stable share price, commonly $1. A variable-NAV fund calculates a changing share price from its assets and liabilities. Income distribution is a separate choice: variable pricing does not automatically mean a fund accumulates income.

Can investors redeem tokenised money market funds at any time?

Redemption depends on the product. Some offer facilities for near-instant conversion into a stablecoin, subject to capacity and other conditions. Others process redemptions according to fund dealing schedules. Around-the-clock token transfers do not automatically provide around-the-clock fund redemption.

Are tokenised money market funds stablecoins?

No. A fund token represents an investment interest, with returns and rights governed by the fund’s documents. A payment stablecoin serves a different purpose and has its own backing and redemption arrangements. A fund’s $1 share-price target does not make its token a stablecoin.

Is USDY a money market fund?

No. Ondo’s USDY is a secured note backed by short-term US Treasuries and bank demand deposits. It provides exposure to a similar source of income, but holders have rights under a debt instrument rather than ownership of money market fund shares.

Does MiCA regulate tokenised money market funds?

MiCA excludes crypto-assets that qualify as financial instruments. Tokenised fund shares that meet that classification fall under the relevant securities and fund rules. Using a blockchain does not, by itself, bring a fund within MiCA.

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