The European Central Bank published a Macroprudential Bulletin article analysing tokenised money market funds (TMMFs), meaning money market funds whose shares are issued as tokens on distributed ledger technology. It finds that tokenisation could bring faster settlement, near-24/7 availability and new collateral uses, but that most TMMFs remain partly off-chain and can amplify the familiar liquidity and run risks of traditional money market funds through additional operational and market-structure vulnerabilities. Using hand-collected fund-level data, the article estimates the global TMMF market at around EUR 7 billion, with EU-domiciled TMMFs at about EUR 725 million, and notes that market capitalisation roughly doubled within a year with the ten largest funds holding more than 90% of the total. Liabilities are generally heavily tokenised while assets and core processes such as asset management and, in many cases, the legally authoritative ownership record remain off-chain, with subscriptions and redemptions often routed via intermediaries and sometimes settled in stablecoins. This split can leave token liquidity running ahead of the fund’s ability to meet cash outflows given traditional cut-off times, while secondary-market pricing that diverges from net asset value and stablecoin de-pegging risk could reinforce run dynamics. The reliance on parallel on-chain and off-chain infrastructures and multiple service providers also raises cyber, outage, congestion, smart contract and price-oracle risks, and permissionless DLTs may add uncertainty over settlement finality and ownership where dual ledgers are used. A dedicated comparison with fiat-pegged stablecoins highlights shared features such as reserve-backed tokens offering daily liquidity and maturity transformation, but also differences in use cases, transfer restrictions and redemption mechanics, and the EU frameworks that govern them, with TMMFs in scope of the Money Market Fund Regulation and stablecoins under the Markets in Crypto-Assets Regulation which prohibits paying yield. Interlinkages could transmit shocks in both directions, including through stablecoins used for TMMF subscriptions and redemptions and the potential for TMMFs to be held as stablecoin reserves, with several large funds relying on a single stablecoin for settlement. The article points to two supervisory priorities: applying existing MMF requirements consistently to TMMFs and strengthening data and reporting on tokenised MMFs, including their size, use cases and connections to both traditional and digital asset markets.
European Central Bank 2026-04-01
European Central Bank study estimates tokenised money market funds at around EUR 7 billion and warns of amplified run and operational risks
The European Central Bank published analysis on tokenised money market funds (TMMFs), estimating the global market at around EUR 7 billion and noting most structures remain partly off-chain, creating a mismatch between token and underlying fund liquidity. Tokenisation can enhance settlement speed and availability but may amplify liquidity and run risks through additional operational, cyber and market-structure vulnerabilities, including reliance on stablecoins and dual on-chain/off-chain infrastructures. The ECB identifies supervisory priorities to apply existing money market fund rules consistently to TMMFs and improve data and reporting on their size, use cases and interlinkages with traditional and digital asset markets.