Tokenized funds add $2.7B in 90 days as JPMorgan, Ondo lead

Tokenized funds added $2.7 billion in market capitalization over 90 days, with JPMorgan and Ondo Finance leading the expansion of blockchain-based investment products.

"The sheer scale of this market just offers a huge opportunity to create a lot more efficiency across the whole financial plumbing," Mathew McDermott, Goldman Sachs' global head of digital assets, said.

Securitize's tokenized products grew $580 million over 30 days, according to Token Terminal, with a large share tied to powering BlackRock's BUIDL fund. J.P. Morgan added $105.1 million over the same period through its Kinexys platform, while Franklin Templeton's OnChain US Government Money Fund reported about $721 million in total net assets.

The growth targets a $7.1 trillion money market industry that has drawn roughly $2.5 trillion in allocations since the Federal Reserve began raising rates in 2022. Tokenized funds carry yield, unlike stablecoins, making them attractive to hedge funds, pensions, and corporations managing idle cash.

Yield-Bearing Collateral Bridges TradFi and DeFi

Goldman Sachs and Bank of New York Mellon built a system letting institutional clients buy tokenized money market funds, with ownership recorded on Goldman's blockchain. BlackRock, Fidelity Investments, and Federated Hermes joined the project alongside the two banks' asset management arms.

Tokenized money market funds pay yield to holders, a feature stablecoins lack. That makes them useful as collateral for trading and margin requirements, according to BNY and Goldman executives. "The step of tokenizing is important, because today that will enable smooth and efficient transactions, without the frictions that happen in traditional markets," Laide Majiyagbe, BNY's global head of liquidity, financing and collateral, said.

The digitized funds may eventually allow direct transfers between financial intermediaries without first liquidating to cash, enhancing their utility as collateral for trades and regulatory capital requirements.

The regulatory environment has shifted in favor of on-chain products. The SEC issued a no-action letter allowing Franklin Templeton's fund to invest in blockchain-based money markets, removing custody requirements that slowed adoption among large asset managers. President Donald Trump signed the GENIUS Act, establishing a federal framework for US-regulated stablecoins, which prompted JPMorgan, Citigroup, and Bank of America to explore stablecoin applications in payments.

For DeFi protocols, tokenized Treasuries offer a stable, income-generating alternative to volatile crypto assets as the foundation of lending markets. A hedge fund could hold tokenized Treasuries as collateral on a decentralized lending protocol, earning yield on reserves while using them to access leverage.

Ondo Finance, which tokenizes short-term US Treasuries and money market funds, has been a primary beneficiary of the inflow. The sector's growth shows traditional finance and on-chain infrastructure converging, with tokenized funds emerging as a bridge asset that pays yield while settling continuously rather than during banking hours.

This article is for informational purposes only and does not constitute investment advice.