The Bank for International Settlements published a bulletin on tokenised money market funds (TMMFs), describing how shares in regulated funds are being represented as tokens on public permissionless blockchains and increasingly used as yield-bearing collateral and savings instruments in decentralised finance. The paper outlines current operating models, documents market growth and interlinkages with stablecoins, and draws out risk and policy considerations. TMMFs are legally securities and are supervised by securities market authorities, but they circulate on-chain in ways that resemble stablecoins while distributing returns in line with money market rates. Compliance is typically supported through investor onboarding and “allow-listing” of blockchain wallets, combined with token standards that enable permissioned transfers, although the bulletin notes allow lists constrain only direct holding and can be bypassed via wrapping and secondary trading venues. Based on a sample of 36 funds, total value locked rose from about USD 770 million at end-2023 to almost USD 9 billion by end-October 2025, with activity shifting towards Ethereum, which accounts for 50% of TVL; investments are predominantly in short-term US government securities and repo backed by such securities, and holdings can be highly concentrated, with around 90% of tokens in some large funds held by four wallet addresses. The BIS highlights risks that mirror and could amplify those of conventional money market funds and stablecoins, including liquidity mismatches between daily redemptions and traditional settlement cycles, run dynamics potentially intensified by blockchain transparency, contagion channels created by instant redemption links with stablecoin issuers and “fund of fund” and repackaging structures, leveraged looping strategies, and operational and technological vulnerabilities. It also notes that fragmented cross-border regulatory frameworks could increase risks of regulatory arbitrage and AML/CFT challenges, and points to shared trusted wallet ID systems with ongoing compliance monitoring as a potential alternative to fund-by-fund allow lists.

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