What is a tokenised money market fund, and how is it different from a stablecoin?

The short answer

• A money market fund invests in short-term, high-quality assets such as Treasury bills, certificates of deposit, commercial paper and bank deposits [5]. A US government money market fund holds at least 99.5% of its assets in cash, government securities and fully collateralised repo [6]. Investors own shares or units in the fund and subscribe and redeem at its net asset value (NAV) per unit [5], struck at set times under fund rules and fund regulation.
• A tokenised MMF is the same fund, or a share class of it, with its units recorded or represented on a distributed ledger.
• A stablecoin is a crypto-asset that aims to keep a stable value against a currency or other assets [10]. Under the US GENIUS Act, which takes effect by January 2027 at the latest, a payment stablecoin's issuer must redeem it “for a fixed amount of monetary value” and hold reserves backing it at least one to one [8]. In the EU, the equivalent token referencing a single currency is an e-money token [9].

Three ways a fund can be "tokenised"

Model	What the token is	Which record is legal title	Example
On-chain register	The fund's own register of units is kept on a ledger	The ledger	UK guidance now says that where an authorised fund keeps its unitholder register on DLT, the on-chain record of transactions may be treated as the primary books and records [1]
Transfer agent's record, with the blockchain as a copy or part of the system	Units recorded on a blockchain, alongside or inside the transfer agent's system	The transfer agent's record	Fidelity's OnChain share class: the book-entry record is official and the blockchain is a secondary record [3]. Franklin Templeton's fund: the transfer agent keeps the official record in a blockchain-integrated system [4]
Mirror token	A token that mirrors a holding kept elsewhere	The conventional books and records	BNY and Goldman Sachs: BNY keeps the official books and records [2]

For collateral, this table matters more than anything else. A pledge or a title transfer has to act on the record that counts in law. Where the blockchain is only a copy, it can lag: Fidelity's prospectus warns that the on-chain record “may not represent an investor’s then-current ownership balance” [3].

Tokenised MMF or stablecoin?

	Tokenised MMF	Stablecoin
What you hold	A share in a regulated investment fund [5]	A claim on the issuer [9]
Value	Some funds, such as the US government funds above, aim for a stable $1.00 share price but do not guarantee it [3] [4]; others move with the NAV [5] [6]. For stable-price funds, US advertising must state that the fund “cannot guarantee it will do so” [7]	Aims to stay fixed at one unit of currency [8] [9]
Income	Earns the fund's yield, after fees	None from issuers regulated under MiCA, which bars interest; the GENIUS Act imposes the same ban once it takes effect, by January 2027 at the latest [8] [9]
Getting cash	Redeem through the fund's dealing cycle; depending on its rules, the fund may charge liquidity fees or suspend redemptions [4]	Redeem with the issuer: in the EU at any time, at par and without a fee [9]; in the US, once the GENIUS Act applies, under the issuer's published redemption policy [8]
Who can hold it	Usually investors approved by the transfer agent, using permissioned wallets [3] [4]	Depends on the issuer and the venue
Typical collateral use (examples)	Margin for OTC derivatives and repo, where the fund is eligible [11]	Settlement asset and margin on some trading venues

Why it matters for post-trade

• For collateral teams: tokenised MMF units can move as collateral without first being redeemed [11]. The questions are eligibility, control, valuation, the cash leg and the path to cash. See our deep dive: Tokenised money market funds as collateral, and our tracker.
• For technology teams: fund dealing is asynchronous (request, cut-off, NAV strike, settlement), so the ledger has to model dealing days rather than instant swaps. See our Lab: A tokenised MMF pledged as CCP margin.