According to a brand new report by Moody, a brand new class of short-term funds, a brand new class of digital financial products that bridge traditional and decentralized funds, have grown to $ 5.7 billion in assets.
The loan rating service sees growing interest from conventional asset managers, insurers and brokers who wish to offer customers access between fiat and digital markets. “Token short -term liquidity funds are a small but rapidly growing product,” says a report on June 3 with cointelegraph.
These funds, that are normally supported by US treasuries or other assets with low risk, work similarly to standard money market funds, but use blockchain to output and manage fractional shares to be able to enable real-time cleansing. Data from the Federal Reserve show that the US money market fund belonged to a complete of $ 7 trillion dollars of total assets from December 2024.
Total money market fund. Source: Federal Reserve
According to Moody's, aspiring applications for tokenized funds can include return optimization for institutional investors in comparison with stable coins, liquidity management for insurance firms and the use as collateral for trading and credit corporations.
“We expect the AUM of this room to grow, since most major financial broker, private bank and asset management platforms offer digital assets will probably use a product of cash-swing types corresponding to a token-like short-term liquidity fund to be able to earn no invested money in a product.”
A handful of players leads the expansion of the sector. The USD Institutional Digital Liquidity Fund of Blackrock heads the package with 2.5 billion US dollars of managed assets, followed by Franklin Templetons Onchain Us Government Money Fund with $ 700 million. Other essential players are superstate, Ondo Finance and Circle, whose funds manage between 480 and 660 million US dollars.
Companies also consider tokenization as an instrument to realize wider markets. The German Protocol Midas recently announced a tokenized certificate that was supported by US financing calculations for European investors and offered the earnings bonds of state government bonds without minimum investment bonds.
In May, the brokerage company Robinhood took the same step to supply investors in Europe within the US markets. In addition, the corporate recently submitted a proposal to the US Securities and Exchange Commission (SEC) for a tokenization regulatory framework within the country. According to Vlad Tenev, CEO of Robinhood, “tokenization is a brand new paradigm to assign institutional assets”.
The report can be exposed to vulnerables which can be related to blockchain technology, to be sophisticated for money market instruments typical for money market instruments. This includes intelligent contractual errors, cyber threats, the provision of network and regulatory uncertainty.
“[…] Risks to represent assets may result from discrepancies between the blockchain register and other shareholder documents regarding the legal property of shares, ”the report says.
