Onchain money market funds have grown nearly 10-fold since 2023, but the Bank for International Settlements warns their adoption brings new liquidity and contagion risks.
Tokenized money market funds are emerging as one of the most important yield-bearing assets on public blockchains, offering money-market returns and securities-level protections that stablecoins can’t provide, according to a new report from the Bank for International Settlements (BIS).
According to the bulletin, tokenized money market funds now hold nearly $9 billion in assets, up from about $770 million at the end of 2023. The BIS warned that as these tokenized Treasury portfolios become a key source of collateral in the crypto ecosystem, they also bring new operational and liquidity risks.
Tokenized money market funds are blockchain-based representations of traditional money market portfolios, providing investors with onchain access to short-term, interest-bearing assets, such as US Treasurys.
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