Growth of tokenized money market funds to $9 billion and new risks from BIS
Tokenized money market funds operating on the blockchain have experienced significant growth, reaching nearly $9 billion in assets, up from approximately $770 million at the end of 2023. This makes them one of the most important income-generating assets on public blockchains, but the International Bank for Settlements (BIS) warns that their use brings new liquidity risks that could exacerbate problems in situations of large withdrawals.
Source Cointelegraph
Despite the flexibility that these tokens offer, their reliance on authorized wallets and a limited number of large holders can lead to market stress during a spike in redemption requests. Also, the links to stablecoins increase the risk, as some of these funds provide quick conversions to stablecoins or are used for lending transactions. The BIS notes that such mechanisms can lead to the rapid spread of market stress, making them potentially more dangerous than traditional money market funds.
Resource giants, including Franklin Templeton and BlackRock, are actively developing their tokenized products. Franklin Templeton has announced the integration of its Benji fund with the blockchain ecosystem, and BlackRock has expanded its BUIDL tokenized fund to new platforms. This indicates a growing interest in tokenized assets from the world's leading investors, although they pose potential risks to the likely development of the market.
