JPMorgan: Tokenized Money Funds Unlikely to Top 15% of Market

TLDR

• JPMorgan said tokenized money market funds are unlikely to grow beyond 10% to 15% of the stablecoin market.
• The bank’s analysts said tokenized money market funds currently make up about 5% of the stablecoin universe by market cap.
• JPMorgan said stablecoins still dominate the crypto market because they support trading, settlement, collateral management, and cross-border payments.
• The analysts said tokenized money market funds face a structural regulatory disadvantage because they are generally classified as securities.
• JPMorgan said securities law requirements make it harder for tokenized money market funds to circulate freely across the crypto ecosystem.

JPMorgan said tokenized money market funds are unlikely to exceed 10% to 15% of the stablecoin market without regulatory change. The bank’s analysts said these funds now represent about 5% of the stablecoin universe by market cap. They added that stablecoins still lead the crypto market because they support trading, payments, settlement, and liquidity management.

Tokenized Money Market Funds Face Regulatory Limits

JPMorgan analysts led by managing director Nikolaos Panigirtzoglou outlined the view in a new report. They said tokenized money market funds will likely keep growing because they offer yield.

However, the analysts said that growth will probably not shift the balance with stablecoins. They wrote that the funds are unlikely to move beyond 10% to 15%.

“We doubt that tokenized money market funds would grow beyond 10%-15%,” the analysts said. They tied that limit to the current regulatory treatment of the products.

The report said stablecoins remain the crypto ecosystem’s preferred cash instrument. They are used for collateral, trading, settlement, cross-border payments, and daily liquidity needs.

By contrast, tokenized money market funds do not move as freely across blockchain networks. JPMorgan said that gap reflects a structural regulatory disadvantage.

The analysts said these funds are usually classified as securities. That classification brings registration, disclosure, reporting, and transfer requirements.

Those rules make it harder to circulate onchain funds across exchanges and decentralized finance protocols. As a result, their use remains more limited than stablecoins.

Stablecoins Still Dominate While Onchain Fund Access Expands

JPMorgan said current demand comes mainly from crypto-native investors and institutions. Crypto investors seek yield, while institutions want faster settlement and programmability.

The bank said institutions also value tokenization within existing investor protection frameworks. That keeps the products closer to traditional finance than to open crypto markets.

The analysts pointed to a Securities and Exchange Commission step earlier this year. The SEC introduced a streamlined process for issuing onchain money market funds.

According to JPMorgan, the process aims to simplify redemptions and reduce friction. It also supports funds that use blockchain-based recordkeeping systems.

The report also cited efforts by traditional finance firms and crypto companies. Those efforts let institutions use onchain fund shares as off-exchange trading collateral.

Under those structures, investors post tokenized fund shares through regulated platforms. The underlying assets remain in regulated off-exchange custody while traders retain collateral utility.

JPMorgan called those changes “marginal” improvements rather than a broader shift. The bank said the SEC’s streamlined process remains the latest factual regulatory update.

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