JPMorgan reports that tokenized money market funds account for only about 5% of the stablecoin universe despite offering yield. Crypto market participants favor stablecoins as the default cash instrument for trading, collateral management, settlement, and cross-border payments across centralized exchanges and DeFi protocols. Money market funds face a structural regulatory disadvantage as securities, with registration, disclosure, and transfer restrictions limiting circulation in crypto. Analysts doubt tokenized funds will exceed 10-15% of stablecoin market without regulatory change. Demand is mainly from crypto-native investors seeking yield and institutional investors combining blockchain settlement with traditional protections. While tokenized funds enable near-instant settlement and 24/7 transfers, they face liquidity, counterparty, and regulatory risks. The SEC introduced a streamlined process for onchain money market funds, and partnerships allow institutions to use them as off-exchange collateral, but these developments are marginal.

Key facts

• Tokenized money market funds account for only ~5% of stablecoin market.
• Stablecoins dominate as default cash instrument in crypto trading and DeFi.
• Regulatory classification as securities limits money market fund circulation.
• Demand for tokenized funds is mainly from crypto-native and institutional investors.
• JPMorgan doubts tokenized funds will exceed 10-15% of stablecoin market without regulatory change.