Amid the growing interest in integrating traditional financial instruments with blockchain technology, there’s time to demystify tokenised money market funds and their role in finance.
A few days ago, traditional money market funds hit a record milestone. They amassed total assets worth $7.03 trillion on March 5, illustrating a $51 billion increase from the previous week. Why did we observe such a rapid asset inflow? The answer is simple – the world’s economical and political patterns are changing swiftly, leaving geopolitical instability and trade uncertainty in their wake. Investors are getting worried about the future of their capital and seek safe havens, such as good old money market funds.
However, the third decade of the twenty-first century can offer much more than traditional safe investment harbours. Or rather, today, we have well-known investing instruments in a brand-new shining digital wrapping. When traditional financial instruments collide with breakthrough innovations such as blockchain technology, we receive an investment tool of the new age – tokenised money market funds.
Money Market Funds and Their Tokenisation
Money market funds are types of mutual funds that invest in low-risk, short-term debt securities, aiming to preserve the principal investment, rather than significantly multiply it at greater risk. Their primary goal is to offer investors a safe place to keep some cash while earning a modest return, typically through dividends. Money market funds are designed to maintain a stable net asset value (NAV), often aiming for $1 per share. These funds are also highly liquid. They typically allow investors to buy or redeem shares on a daily basis, providing easy access to funds.
Although they are not insured against loss, actual investment losses in money market funds have been quite rare due to the high quality of the investments they hold (e.g. U.S. Treasury bills or commercial paper). Therefore, investors prefer such funds in times of extreme market and overall instability, such as current on-and-off tariff implementation between the U.S. and its trading partners.
With the invention of blockchain technology, there arose a possibility to create tokenised, more transparent and accessible versions of traditional financial instruments. That’s how we got tokenised money market funds. These are a digital version of traditional money market funds, using blockchain technology and tokens to represent the fund’s shares. Tokenised funds still provide liquidity and stability while offering returns slightly higher than a regular savings account.
However, they also offer opportunities for users to buy, sell, or transfer tokenised shares easily, becoming more accessible and tradable on blockchain platforms. Additionally, tokenisation can also improve transparency, as the transaction history is recorded on the blockchain, and offers quicker and cheaper transactions compared to traditional financial systems, since blockchain transactions do not involve myriads of intermediaries.
Examples of Tokenised Money Market Funds
Today, tokenised money market funds are not incredibly widespread. And yet, they already exceed USD$1 billion in assets under management. However, as the adoption of blockchain and digital assets continues to grow, tokenised money market funds are likely to become more popular as a way for investors to store their funds securely while also earning modest returns.
Some projections estimate the value of tokenised real-world assets could reach $16 trillion as soon as 2030, signaling strong market demand for these financial tools. Money markets are one of the most popular government securities to undergo tokenisation.
Here are some examples of successful and emerging tokenised money market funds.
Ripple’s Fund on XRP Ledger
In late 2024, blockchain payments firm Ripple, in collaboration with Archax and asset manager abrdn, launched the first tokenised money market fund on the XRP Ledger. This fund is part of abrdn’s £3.8 billion/$4.77 billion US Dollar Liquidity Fund (Lux), aiming to provide efficient and transparent investment options for safe haven-seeking professional investors. Demonstrating confidence in the initiative, Ripple allocated $5 million into tokens of abrdn’s US Dollar Liquidity Fund.
Archax and XDC Network Collaboration
In February 2025, XDC Network, an enterprise-grade Layer-1 blockchain, partnered with Archax, a UK Financial Conduct Authority (FCA)-regulated digital asset exchange, to tokenise four major money market funds (MMFs). This collaboration brings funds managed by prominent asset managers, including abrdn, Fidelity International, BlackRock, and State Street, onto the blockchain, creating digital representations of traditional MMFs on the XDC Network, enhancing transparency, efficiency, and accessibility for institutional investors, while allowing for improved liquidity and faster settlement times.
BlackRock USD Institutional Digital Liquidity Fund (BUIDL)
BlackRock, a leading global asset manager, introduced its first tokenised fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), on the Ethereum blockchain in March 2024. It offers institutional investors a stable $1 value by investing in short-term U.S. Treasury securities and repurchase agreements. In a month, the fund added new smart contract functionality, enabling BUIDL holders to transfer their shares to Circle for USDC.
Coming from a trustworthy organisation, BUIDL quickly became the largest blockchain-based money market fund, amassing $520 million in assets by November 2024. By the same time, the asset manager expanded BUIDL’s accessibility by launching it on multiple blockchain networks, including Aptos, Arbitrum, Avalanche, Optimism’s OP Mainnet, and Polygon, to enhance the fund’s accessibility and interoperability within the decentralised finance (DeFi) ecosystem.
Fidelity International & Partners
Fidelity International offers the US Dollar Cash Fund, a money market fund designed to provide returns in line with prevailing money market rates (2.23% – 5%). The fund primarily invests in high-quality, short-term US dollar-denominated instruments, including reverse repurchase agreements and deposits. In February 2025, Fidelity International partnered with Archax, a UK Financial Conduct Authority (FCA)-regulated digital asset exchange, to tokenise its USD Money Market Fund on the Hedera network. This initiative allows investors to access the fund through blockchain mechanisms, offering benefits such as near-instant transfers and enhanced transparency.
Earlier, Fidelity has engaged into several other partnerships related to tokenisation of money market funds. Thus, in 2024 the asset manager partnered with two major financial players – J.P. Morgan and Citi. First, Fidelity tokenised shares of its MMFs using J.P. Morgan’s Ethereum-based private blockchain network, Onyx Digital Assets to improve the efficiency of collateral management with near-instantaneous settlement of tokenised assets. By integrating with J.P. Morgan’s Tokenized Collateral Network (TCN), Fidelity facilitated the use of tokenised MMF shares as collateral, reducing transaction costs and operational risks.
Later that year, the firm collaborated with Citi to develop a proof-of-concept for an on-chain MMF combined with a digital foreign exchange (FX) swap solution. This innovative approach allowed for real-time settlement and management of multi-asset positions across different currencies. By integrating these processes on a blockchain platform, the solution enhances liquidity management and operational efficiency, enabling faster and more efficient management of treasury positions.
Benefits of Tokenised Money Market Funds
More investors today are seeking ways to access the benefits of traditional money market funds through the innovative blockchain infrastructure. There are several benefits to this approach, which make tokenised money market funds very attractive to both customers and asset managers. Here are several factors contributing to these funds’ growing potential:
- stability – despite connection to a novel technology that might be misunderstood by conservative investors, tokenised money market funds are still linked to the same conventionally stable assets, which tend to maintain their value even in tough times;
- liquidity – in unpredictable economic conditions, it is important for investors to be able to access their funds immediately in case of any emergency, that’s where tokenised money market funds step in as highly liquid and flexible financial instruments;
- faster transactions – blockchain technology enhances transaction speeds compared to traditional MMFs through the automation of processes and the reduction of intermediaries, leading to faster settlement times. Traditional money market fund settlements are typically done within about 24 hours. In contrast, blockchain-based or tokenised settlements can be nearly instantaneous, often taking just a few minutes or even seconds;
- improved accessibility – tokenised funds are easier to access for smaller investors, with fractional ownership functionality enabling more people to participate in the market economy with lower amounts of capital;
- DeFi integration – tokenised money market funds can be integrated into various DeFi platforms, where users can earn interest, access liquidity, and engage in other financial activities in a decentralised environment. That allows to seamlessly combine various investing strategies;
- transparency – every transaction on a blockchain is recorded on an unchangeable ledger. This means that once a transaction occurs, it’s permanently logged with a timestamp and all the relevant details, making it easy for anyone (with proper access) to verify what happened. Since transactions are recorded as they occur, investors and regulators can monitor fund activity in real time. This provides immediate insight into asset movements, fund performance, and overall compliance;
- reduced fraud and errors – open, transparent nature of blockchain makes it much harder for fraudulent activities to go unnoticed. With every action recorded and visible, discrepancies are easier to spot and resolve. Besides, detailed transaction history allows for simpler and more effective audits. Stakeholders can trace every transaction, ensuring that funds are managed properly and that regulatory requirements are met. Furthermore, smart contracts can enforce compliance rules and operational guidelines automatically, without human intervention;
- modest returns – tokenised money market funds offer yields comparable to traditional funds (about 4.16%), given that both invest in similar short-term, low-risk instruments;
- innovation – as cryptocurrencies and digital assets become more mainstream, tokenised financial products like money market funds and other real-world asset tokenisation initiatives are seen as a bridge between traditional finance and the digital economy of the future. Since most investors are geared toward long-term capital growth, they prefer adopting new technologies early to reap the most benefits out of innovative financial instruments.
Summary
Tokenised money market funds combine traditional safe investments with blockchain technology, offering digital versions of low-risk, short-term financial instruments. These funds provide stability, liquidity, and modest returns while improving accessibility, speed, and transparency through blockchain. Recent launches from major financial companies like Ripple, BlackRock, and Fidelity International highlight growing interest in these digital assets, with more than $1 billion already under management.
The key advantages of tokenised money market funds include faster transactions, improved liquidity, and integration with decentralised finance (DeFi) platforms. Blockchain technology enhances security, reduces fraud, and simplifies audits through transparent record-keeping. While their returns are similar to traditional money market funds, their digital nature allows for greater efficiency and accessibility, making them an attractive option for investors in an evolving financial landscape.
