The tokenised money market fund (“MMF”) market has crossed a threshold.
What began as a series of carefully constructed pilots is now becoming a meaningful asset class, attracting both the world's largest asset managers and a new generation of digital-native investors. It is momentum built on structural need, and on a clear convergence of forces that are remaking how capital is held, moved, and put to work.
The question for asset managers is no longer whether to participate in this market. It is how to participate credibly, at scale, and without operational compromise. Getting that answer right will define who leads and who follows in the next chapter of fund distribution.
A nearly €17 billion market that will grow quickly
The tokenised treasury market has almost reached €17 billion globally according to RWA.xyz in early May 2026. It grew 2.5 times in a single year, outpacing both stablecoins and traditional MMFs over the same period. The ten largest funds account for more than 53% of total market capitalisation, most domiciled in the US, British Virgin Islands, and Hong Kong. The opportunity for asset managers who move now is significant. At this pace, waiting is no longer a neutral decision.
The driving forces for market growth
Three forces are converging to make tokenised MMFs one of the most strategically important products in asset management right now.
Asset managers are under pressure. Retail distribution is more competitive, institutional mandates harder to win, fee compression persistent. Reaching new investor pools across borders has historically required costly local infrastructure and distribution agreements that favour larger incumbents. Tokenisation changes that calculus. The cost of distribution does not scale linearly with geography when the instrument itself carries its compliance rules.
Stablecoins are creating a new market. On the one hand, stablecoin issuers are seeking tokenised MMFs as their highly liquid and low-risk reserve assets, amid regulatory requirements across the globe. On the other hand, stablecoin holders, cryptocurrency traders, DeFi protocols, Web3 companies, hold hundreds of billions in assets earning little or no yield. They need always-on yield. Tokenised MMFs are the answer. Regulated asset managers who move now can capture this demand on their own terms, rather than ceding the space to less regulated alternatives.
Institutions need on-chain cash equivalents. As institutional participation in digital assets deepens, the absence of regulated, yield-bearing on-chain cash has become a real operational constraint. Regulated stablecoins remain immature across most jurisdictions. Tokenised MMFs fill that gap today, acting as cash equivalent that are familiar, regulated, and natively on-chain for institutional players.
Tokenised MMFs unlock structural advantages
For issuers, tokenised MMFs are creating a more efficient and scalable distribution model. Always-on availability allows subscriptions and redemptions to operate 24/7, matching the pace of digital assets and removing the limitations of market hours. Near instant on-chain settlement reduces counterparty and operational risk while lowering the capital tied up during settlement cycles. At the same time, compliance embedded directly into the token enables a single issuance to reach authorised investors across global distribution networks.
For investors, tokenised MMFs provide greater accessibility, flexibility, and utility. Fractionalisation lowers entry thresholds, making institutional-grade yield products accessible to a much broader investor base. Investors can also move capital more efficiently through always on subscriptions and redemptions, without waiting for traditional market cut-off times.
As the market matures and moves into a more advanced stage, tokenised MMFs can also be integrated into third party applications, enabling cross platform utility. By connecting wallets to DeFi lending platforms, tokenised MMFs can be used as collateral to borrow stablecoins, or deployed into decentralised exchanges/automated market makers (“AMMs”) as liquidity provision assets to generate additional yield. This is made possible through the interoperability and composability of tokenised MMFs.
The challenges that must be solved
The opportunity is clear. Capturing it means solving two distinct challenges which are technology and operations.
The technology challenge is embedding compliance into the token itself. Tokenised fund units must enforce “in code” who may hold them and under what conditions they may be transferred. This cannot be an afterthought managed off-chain; it must be native to the token.
A significant development here is the UK FCA's move toward recognising native on-chain representation of financial instruments, treating the blockchain as the primary legal record rather than a wrapper around an off-chain asset. If followed by other jurisdictions, this removes one of the most persistent friction points in tokenised issuance and has direct implications for settlement finality, collateral enforceability, and smart contract-based governance. If the on-chain record becomes the legal record, the compliance logic embedded into the token effectively becomes part of the fund’s infrastructure.
Standardisation is critical to making this model scalable. Without common standards, tokenised assets remain confined to the platforms that issued them, limiting interoperability and preventing the network effects that make tokenisation transformative. Distribution cannot scale if every platform operates under different technical and compliance frameworks.
ERC-3643 was designed precisely for this. The permissioned token standard enforces investor and transfer rules through embedded logic, tracks ownership via on-chain identity, and enables full control to freeze or recover tokens when required. It is open-source, referenced by SEC Chairman Paul Atkins as an example of compliance built into token architecture, and supported by more than 140 members through the non-profit ERC3643 Association. It is the industry's clearest answer to the standardisation challenge.
The operational challenge is whether transfer agents and administrators have the capability to handle tokens at scale. A tokenised money market fund that never closes requires an administrator that never closes, delivering NAV in real time, processing subscriptions and redemptions around the clock, across time zones, to the standard regulated funds demand.
Traditional transfer agents were not built for this. Our Group has a clear vision that the future of the capital market will be on-chain. Thirteen years ago we administered one of the first digital asset funds in Malta, before tokenisation was an industry conversation. The decade since has been spent building the operational muscle, technology infrastructure, and trained expertise to service tokenised assets the way they actually work, not adapting legacy processes to fit a new model.
That foundation was put to its clearest test when Fidelity, one of the world's largest and most operationally rigorous asset managers, chose us as their digital transfer agent to launch a tokenised money market fund. The ask was unambiguous. 24/7 subscription and redemption processing. Tokenised fund units managed with the same precision, compliance, and accountability their investors have always expected. What looks seamless from the outside represents something much hard-earned that my team along with all internal key stakeholders have built, harnessing a decade of deliberate transformation across business model, technology and operational culture. That is the work that made this moment possible.
The last mile for mass adoption
The last mile for mass adoption has always been the hardest. The constraint has been fragmentation to launch a tokenisation project. Technology providers who cannot service. Servicers who cannot technically tokenise. Asset managers caught assembling solutions from pieces that were never designed to work together, absorbing integration risk that should never have been theirs to carry. In practice, that fragmentation translates into months of painful coordination between providers who speak different technical languages, operate on different timelines, and share limited accountability for the outcome.
As fund administrators at the centre of this market, we see that fragmentation of technology and operations across multiple suppliers being resolved [AM2.1][SL2.2]in real time by integrating both capabilities under one roof. With it, the pace of adoption is accelerating. The acquisition of Tokeny into our Group business in May 2025 is one expression of that consolidation. The clearest signal comes from the market itself. Across funds, real estate, infrastructure, and commodity-linked notes, spanning the US, Middle East, Asia, and Europe, asset managers are not asking whether to tokenise. They are asking how to do it faster. Our pipeline for digital asset services has grown exponentially since Q2 last year.
Where the market is going
The forces shaping this market today are early expressions of much larger structural shifts that will define the next decade of asset management.
The generational transfer of wealth is moving capital to investors who expect to act on their portfolios at any moment. They do not accept settlement lags or market hours as structural features of investing. The infrastructure of finance will need to meet that expectation, not constrain it.
AI agents are entering financial markets. Autonomous systems managing portfolios and executing treasury operations require instruments that are machine-readable, programmable, and available at any hour. Assets that are not on-chain will not be visible to this layer of the market, and that layer is growing faster than most asset managers currently appreciate.
A new utility is emerging. The ability to use a tokenised MMF position as collateral in a lending protocol or AMM without liquidating the underlying holding opens possibilities unavailable in traditional structures. Tokenised MMF units can be posted as margin without liquidating, so capital is simultaneously earning yield and serving as collateral. For corporate treasury managers, always-on yield replaces cash sitting idle on overnight deposits. These use cases will become standard within the next few years.
What asset managers should be asking
The strategic questions are becoming urgent.
Build or buy? While creating tokenisation technology internally might appear to offer greater control, the challenges of constructing a fully coordinated platform from the ground up are routinely underestimated. The market is moving too fast for bespoke development cycles. The asset managers gaining ground are the ones who recognise that the technology already exists, is proven in production, and is available now.
Who has actually done this and knows where the market is heading? The tokenisation space is loud with vendors, platforms, and frameworks all promising to solve the problem. Track record cuts through that noise faster than any pitch deck. The question is not who can tokenise an asset in a demo environment. It is who has delivered live, regulated, institutional-grade tokenised funds at scale. A tokenised fund that launches smoothly but cannot process a redemption at 2am on a Sunday has not solved the problem. Technology and operations must be proven together, not separately. The governance principles that define institutional-grade don’t change because the underlying technology has, if anything, independent oversight matters more in a newer asset class.
Who is leading this internally? Technology and operations can be sourced externally. Judgment cannot. The asset managers who will define this market are those who have built leadership teams capable of separating genuine innovation from noise, asking the right questions of partners, and making decisions with conviction in a market that still has more opinions than answers. That talent is rare, and the organisations investing in it now will have an advantage that compounds over time.
The opportunity window in tokenised MMFs has been open for some time now. It will not remain open indefinitely. The asset managers who move in the next 12 to 18 months will define the distribution standards, the investor relationships, and the on-chain presence that later entrants will find difficult to replicate. The infrastructure is ready. The regulatory direction is supportive. The investor demand is demonstrable. What remains is the decision to act with the right partners, on the right technology, with the right people leading the way.
*This article was originally published in Asset Servicing Times (Issue 391) and has been republished here with permission.
