In today’s “Crypto for Advisors” newsletter, Harvey Li of Tokenization Insights takes us through tokenization trends, money market funds and institutional adoption as we head into 2026.
So in “Ask an Expert,” Michael Sena looks at what this means for investors BlackRocks announced plans to tokenize everything from exchange-traded funds (ETFs) to real estate.
-Sarah Morton
Tokenization’s Breakout Asset Class: Tokenized Money Market Funds
Tokenization entered a new phase in 2025. What started as an experiment is now becoming a functional part of institutional infrastructure, led by banks and asset managers who are not waiting for a tokenized future – they are building it.
One specific product category has emerged as the clear front-runner: tokenized money market funds (MMFs). Tokenized MMFs are fast becoming the central on-chain liquidity instrument for institutions, treasurers and sophisticated funds. They bridge traditional short-term US Treasury exposure with digital settlement, programmable workflows and real-time portability.
The growth is real:
- Assets under management (AUM) grew from $4 billion at the start of 2025 to $8.6 billion in November, an increase of 110% (RWA.xyz)
- Tokenized MMFs now represent ~3% of the stablecoin market compared to 2% at the beginning of the year
And institutions are incorporating tokenized MMF into businesses:
- JPMorgan went live with intraday repo capabilities using tokenized security powered by HQLAx and Ownera
- BlackRock’s tokenized money market fund is accepted by both OKX and Binance as qualified security
- Lloyds Banking Group and Aberdeen Investments conducted currency derivatives trading using a tokenized money market fund
Momentum is building, but the real story is what comes next in 2026.
What drives the acceleration? Key 2026 catalysts
1. Statutory validation and collateral
The Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee recommended tokenized MMFs as qualified collateral, and Acting Chair Caroline Pham launched a dedicated initiative in late 2025 to promote tokenized collateral.
If tokenized MMFs are approved as eligible margin collateral, recognized for cleared derivatives, swaps and repos, and embedded in CCP and FCM rulebooks, then tokenized MMFs evolve from a cash parking tool to core institutional collateral, the same category that fuels trillions in daily funding today.
This is a big unlock for banks, brokers, hedge funds and trading venues that need intraday settlement and programmable liquidity.
2. The element of “institutional legitimacy”.
Seventy institutions, including State Street, Fnality, Franklin Templeton and UBS, contributed to Global Digital Finance’s November 2025 report, demonstrating that tokenized MMFs can be:
- Moved and pledged in real time across multiple ledgers
- Supported under existing legislative framework
- Legal enforcer and operationally responsible
3. The emergence of tokenized money rails in major banks
Until recently, tokenized MMFs could only be redeemed via traditional bank rails or stablecoins. That is changing fast.
In 2025 we saw:
- JPMorgan tokenized deposit and deposit tokens on private and public chains
- Citi Token Services expanded USD and EUR tokenized deposits and 24/7 treasury flows
- HSBC and DBS enable tokenized deposit infrastructure in Asia and Europe
As tokenized cash lanes mature, institutions will be able to move tokenized MMF to tokenized deposit and settlement cash within the same ecosystem, without friction and without conversion back to legacy payment rails or stablecoins.
This is the moment when tokenized MMFs stop being a crypto-adjacent product and become digital liquidity management blocks for institutions.
4. Regulatory momentum for USD and EUR stablecoins
While tokenized institutional cash rails are rapidly expanding, stablecoin policy and legislation are helping stablecoins become the default cash rail for public permissionless space:
- In the US, GENIUS Act legislation and related frameworks push USD stablecoins into a defined regulatory environment
- In the EU, MiCA provides a complete regulatory regime for e-money tokens and asset-referenced tokens
Once these frameworks are dismantled and SMEs become more familiar with leveraging stablecoins for cash purposes, tokenized MMFs naturally become the return, collateral, treasury and portfolio cash solution.
Bottom line
The direction of travel is clear. Cash that used to sit in bank accounts or legacy MMF portals is now repackaged into programmable instruments that plug directly into digital asset rails, and tokenized MMFs become the cash management and collateral solution for all tokenized cash: tokenized bank deposits, deposit tokens, and stablecoins.
2025 was the breakout year of tokenized money market funds as an asset class. 2026 looks set to be the acceleration phase where tokenized MMFs become a standard asset for treasury, settlement and collateral for institutions.
– Harvey Li, Founder, Tokenization Insight
Ask an expert
Q: Traditionally, US ETFs follow Wall Street market timings and settle through their clearing houses. What are the benefits and obstacles BlackRock’s investors will face in 24/7 trading?
ONE: 24/7 trading will change everything from staffing to risk management. When markets never close, it changes the way you have to operate. The advantages of real-time markets mean that those who can react first will be able to capture the bulk of movements in asset prices.
Question: The market for tokenized assets is still insignificant compared to the trillion dollar US ETF industry. How will BlackRock’s participation contribute to the tokenization ecosystem?
ONE: BlackRock’s massive asset portfolio will instantly increase the total value represented by the tokenized ecosystem. More than that, it brings credibility to all types of blockchain-based assets beyond just Bitcoin and Ethereum.
Q: BlackRock CEO Larry Fink has been optimistic about asset tokenization and wants to tokenize almost all traditional assets. Is tokenization a move to offer better services to investors or maintain its hegemony as the largest asset manager?
ONE: BlackRock clearly sees the future of tokenized assets and all the benefits they bring: reduced operating costs, increased efficiency and more trust. Most of a large asset manager’s business is not in front-end markets, but is in clearing, settlement and other types of back and middle office operations. Blockchain streamlines these processes and enables someone like BlackRock to increase their profit margins
– Michael Sena, Chief Marketing Officer, Recall Labs
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