A tokenized money market fund (MMF) is a digital representation of ownership in a MMF, issued as a blockchain token, typically on a public or permissioned network. Like traditional MMFs, these tokens represent fractional ownership in a pool of high-quality, short-term debt instruments (e.g., T-bills, commercial paper, repurchase agreements). Tokenized MMFs are an emerging innovation that merges traditional short-term, low-risk investment vehicles with blockchain technology.
Key Characteristics:
- Backed 1:1 by real-world MMF assets.
- Traded or transferred on blockchain rails.
- Can be embedded into DeFi or other programmable finance environments.
Traditional MMFs vs. Tokenized MMFs?
| Feature | Traditional MMFs | Tokenized MMFs |
| Custody | Centralized custodians | On-chain, token-based custody (self or via wallets) |
| Settlement | T+1 or T+2 | Near-instant (depending on the blockchain) |
| Access | Via brokerages or institutions | Global, 24/7 access via digital wallets |
| Liquidity | Limited to market hours | Potentially 24/7 secondary market liquidity |
| Compliance Layer | Through brokers & KYC | Smart contracts can enforce KYC/compliance |
| Transparency | Periodic disclosures | Real-time transparency via blockchain (potentially) |
Monetization and Revenue Levers
Tokenized MMFs offer several monetization avenues that blend traditional asset management practices with blockchain-enabled services. Below are five key revenue levers:
1. Management Fees
Similar to traditional MMFs, asset managers charge annual management fees as a percentage of assets under management (AUM), typically ranging from 5 to 50 basis points. These fees are deducted from the fund’s yield before it is distributed to investors. For example, if a tokenized MMF yields 5% gross and charges a 0.25% management fee, the net yield to token holders would be 4.75%. This remains a core revenue stream for fund sponsors.
2. Tokenization Platform Fees
Tokenized MMFs rely on blockchain infrastructure and tokenization platforms for issuance, transfer, and record-keeping.
- Issuance fees: Charged when MMF tokens are created (minted).
- Transfer/transaction fees: Applied each time tokens are moved between wallets or users.
- Redemption fees: Collected when users convert tokens back to fiat or underlying fund shares.
- Ongoing platform usage fees: For maintaining smart contracts or compliance modules.
These fees are typically small per transaction but scalable as adoption grows.
3. Custodial and Wallet Integration Fees
Tokenized MMFs often integrate with digital wallets and custodians. These providers may charge:
- Wallet-as-a-service fees for providing secure, institutional-grade wallet infrastructure.
- Custody fees based on AUM or activity levels.
- API access fees for platforms embedding MMF tokens into apps, robo-advisors, or financial dashboards.
This enables seamless end-user access while generating recurring revenue for infrastructure providers.
4. Embedded Finance / Composability Premium
Unlike traditional MMFs, tokenized versions can be embedded into DeFi protocols, automated treasury systems, or used as collateral in lending platforms. This composability unlocks new use cases (e.g., auto-yield rebalancing, programmable payroll, or liquidity provision), for which platforms may charge:
- Access fees for integrating the token into financial workflows.
- Protocol fees within DeFi environments.
- Premiums for value-added services like analytics, liquidity routing, or compliance automation.
This adds a monetizable layer based on utility and integration depth.
5. Spread Capture
In some tokenized MMF models, intermediaries—such as brokers, platforms, or exchanges—facilitate redemptions or swaps between fiat, stablecoins, and MMF tokens. These transactions may involve a small spread (e.g., buying at NAV – 0.05%, selling at NAV + 0.05%), which allows the intermediary to capture margin without charging direct fees. This model is especially viable in high-frequency environments or cross-border flows.
Beyond Tokenized MMFs
Beyond MMFs, a broader universe of tokenized real-world assets (RWAs) is emerging, offering investors new ways to access traditional financial instruments via blockchain. These tokenized assets differ in terms of yield, risk, liquidity, regulatory complexity, and adoption trajectory.
1. Tokenized Treasuries
Tokenized U.S. Treasury bills (T-bills) have gained strong momentum, especially in a high-interest-rate environment. These instruments combine the safety and yield of government debt with the programmability and efficiency of blockchain. Issuers typically offer tokenized shares in short-duration Treasury ETFs or direct T-bill exposure.
Why They’re Attractive?
- High yield, low risk: Appealing for institutional treasurers and DeFi users seeking stable, on-chain returns.
- Near-instant settlement: Compared to legacy systems with T+1/2 settlement.
- Liquidity: Some platforms offer redemption or secondary trading within 24 hours.
Examples: Franklin Templeton’s Benji Token, Ondo Finance’s OUSG, Maple Finance’s Cash Management Pool.
Tokenized Treasuries are among the most widely adopted RWAs, with over $1 billion tokenized T-bills on-chain as of October 2025.
2. Tokenized Private Credit
Private credit tokenization brings high-yield lending opportunities (e.g., SME loans, invoice financing) on-chain. Investors receive tokens representing exposure to loan portfolios or structured credit deals.
Key Features:
- Higher yields (8–15%) compensate for illiquidity and credit risk.
- Diversification into private markets once reserved for institutional players.
- Complexity: Valuation, due diligence, and default risk make this asset class harder to manage and regulate.
Examples: Goldfinch, Centrifuge, Credix.
Challenges:
- Lower transparency and liquidity than treasuries or MMFs.
- Regulatory risk due to exposure to unregistered lending markets.
3. Tokenized Real Estate and Infrastructure
These platforms tokenize ownership in real assets, enabling fractional investment in residential, commercial, or infrastructure projects.
Examples: RealT (residential), Brickblock, DigiShares.
Advantages:
- Lower minimums: Investors can buy fractional shares in properties.
- Cash flow participation: Via rental income or project revenue.
- Diversification: Real assets offer inflation hedging and uncorrelated returns.
Trade-offs:
- Illiquidity: Secondary markets are nascent.
- Operational complexity: Property management and valuation are offline and harder to automate.
4. Tokenized Equities / ETFs
Tokenized versions of public equities or ETFs are available in limited jurisdictions. These are either fully backed by underlying shares (custodied off-chain) or synthetic representations.
Examples: Swarm, Backed Finance, DeFiChain (synthetic stocks).
Barriers to Adoption:
- Regulatory uncertainty, especially in the U.S. and EU.
- Compliance challenges around KYC, ownership, and market manipulation.
Tokenized equities and ETFs have gained some traction in Switzerland, UAE, and Southeast Asia, where regulatory sandboxes permit innovation. Most offerings today are niche or retail-oriented.
Implications for Traditional Finance
Tokenized financial assets—especially tokenized MMFs, treasuries, and other RWAs—pose significant implications for traditional finance (TradFi). As blockchain infrastructure becomes more integrated into capital markets, banks, brokers, and asset managers face both disruption and opportunity.
1. Disintermediation Risk
One of the most immediate implications is the displacement of traditional intermediaries. Brokers, custodians, and clearing houses that historically earned fees from account maintenance, trade settlement, and asset custody may see revenue decline if clients increasingly hold tokenized assets directly in digital wallets.
Blockchain’s peer-to-peer architecture allows investors to:
- Hold tokenized assets without intermediaries.
- Settle transactions instantly, reducing reliance on centralized clearing.
- Manage portfolio balances on-chain, minimizing third-party custody fees.
As a result, traditional players face pressure to rethink their value propositions and digitize service offerings—or risk being bypassed altogether.
2. Yield Competition
Tokenized MMFs and treasuries offer real-time, high-yield exposure to low-risk assets, often exceeding what is available via savings accounts or bank deposits. These products:
- Provide greater transparency, with on-chain visibility into holdings and performance.
- Are often accessible 24/7, without banking hours or local restrictions.
- Appeal to crypto-native users and fintech platforms looking for yield-generating stable alternatives.
This creates downward pressure on traditional bank margins, as customers—especially corporates and tech-savvy retail users—seek better returns without sacrificing safety. In a higher-rate environment, this yield gap becomes even more noticeable.
3. New Business Models for Financial Institutions
Rather than resisting tokenization, many financial institutions are beginning to adapt and innovate. New business models are emerging around:
- Token issuance: Banks and asset managers may offer tokenized versions of their own funds or structured products.
- Blockchain validation and compliance services: Serving as nodes, validators, or KYC/onboarding providers within permissioned blockchains.
- Liquidity provision: Facilitating deep secondary markets for tokenized assets via market making or lending protocols.
- Custodial wallet solutions: Providing secure, regulated custody for tokenized assets in hybrid infrastructure models.
These shifts allow TradFi players to reclaim their role in asset distribution and management, while aligning with evolving investor behavior and digital asset infrastructure.
4. Cross-Border Finance Transformation
Tokenization drastically improves the efficiency of cross-border payments and investments, which are often slow, expensive, and heavily intermediated. On-chain assets and stablecoins allow:
- Instant global transfers, reducing reliance on SWIFT or correspondent banks.
- Lower transaction costs, especially for small or retail transfers.
- Seamless access to global investment products, including tokenized MMFs or treasuries.
This opens the door to borderless capital markets, where both individuals and institutions can allocate funds globally with fewer frictions. Emerging markets, in particular, may benefit from more direct access to USD-backed, yield-bearing assets.