Related Articles
Forget stablecoins, tokenized money market funds are the new yield king. A groundbreaking BIS report reveals they’re not just offering money-market returns on public blockchains, they’re delivering security stablecoins can only dream of.
Tokenized money market funds are exploding, rocketing from a mere $770 million at the close of 2023 to almost $9 billion today! But hold on, the Bank for International Settlements (BIS) is waving a red flag. These tokenized Treasury portfolios are becoming crypto’s new favorite playground, but they’re also importing some serious risks think operational nightmares and liquidity crunches into the DeFi party.
Imagine earning interest on US Treasurys directly from your crypto wallet. Tokenized money market funds make it real. They’re like digital versions of traditional money market portfolios, bringing short-term, yield-generating assets onto the blockchain for seamless, onchain access.
BIS shines a spotlight on CBDCs, revealing a paradox: While boasting stablecoin-like flexibility, their reliance on controlled wallets, back-end systems hidden from view, and concentrated ownership creates a pressure cooker. Watch out – a rush for the exits or a liquidity drought could turn up the heat fast.
Imagine a high-speed train hurtling down the tracks, only to be stopped abruptly at an old-fashioned customs checkpoint. That’s the problem with tokenized funds. While these digital tokens zip across blockchains with lightning speed, the real-world assets they represent – the stocks, bonds, and commodities – are stuck in the slow lane of traditional finance. This creates a dangerous disconnect, according to the Bank for International Settlements (BIS). When everyone rushes for the exit – triggering a flood of redemption requests – this lag could leave funds scrambling to meet demands, potentially fueling market chaos. It’s like a financial traffic jam waiting to happen.
Stablecoins act like hidden tripwires within tokenized money market funds. These funds, promising stability, offer quick exits into stablecoins or fuel high-stakes leveraged trades. The Bank for International Settlements (BIS) cautions that these interconnected pathways could transform localized tremors into widespread market avalanches, dwarfing the impact seen in conventional money markets.
Barely a day after an eyebrow-raising appointment, the ink was still drying on the press release announcing Tommaso Mancini-Griffoli, the IMF’s champion of Central Bank Digital Currencies, as the new Innovation Hub chief. The appointment sent ripples through the financial world.
Related: Tokenized money market funds emerge as Wall Street’s answer to stablecoins
Asset managers ramp up fund tokenization
The world’s top asset managers have been accelerating the expansion of tokenized money market funds across multiple blockchain networks.
Franklin Templeton’s Benji platform is joining the Canton Network, unlocking a new era for tokenized assets. Imagine Franklin Templeton’s onchain U.S. government money market fund now seamlessly interacting within a secure blockchain universe built for the big players – financial institutions. This Nov. 12th integration signifies a major leap towards mainstream adoption of blockchain technology in finance.
BlackRock’s BUIDL fund, a tokenized money market marvel, is breaking free from Ethereum’s confines! Buckle up as it expands its reach to Aptos, Arbitrum, Avalanche, Optimism, and Polygon, unleashing its digital liquidity across a wider DeFi landscape.
Tokenized US Treasurys. Source: RWA.xyz
BlackRock’s BUIDL fund isn’t just playing in the onchain money market; it’s building an empire. With over $2.5 billion in tokenized assets, RWA.xyz data reveals BUIDL isn’t just leading the pack – itisthe pack.
Franklin Templeton’s BENJI fund has over $844 million in tokenized US government securities, according to the data.
Magazine: Getting scammed for 100 Bitcoin led Sunny Lu to create VeChain
Thanks for reading Tokenized money market funds surge to $9B BIS warns of new risks
