The Race for Tokenized Funds: It's Not Just About Scale

Money market funds are evolving from a "tool for earning returns" to an intermediary layer in the institutional digital capital system. The largest players in the U.S. have gained a first-mover advantage, but not every rule can be set by them.

Written by: Conflux

By the end of 2024, according to Boston Consulting Group (BCG), the global management scale of tokenized funds will have just exceeded $2 billion, still a relatively small experimental market; by May 2026, the combined scale of tokenized government bonds and money market funds alone is expected to reach about $10 billion, with BlackRock's tokenized fund BUIDL capturing about 40% of that share. Almost simultaneously, Hong Kong has shifted the status of tokenized funds from "only redeemable" to "available for 24/7 trading," while banks in Singapore have begun using tokenized money market fund shares as collateral for loans.

The real competition now is: who can make these digital shares liquid—integrated into banks, utilized by trading platforms, and accepted as collateral—transforming from a "blockchain product" into a true "gateway" for institutional funds.

United States: Tying to Stablecoin Reserves

The U.S. is the earliest and most advanced market in this race. In 2021, Franklin Templeton launched the on-chain money market fund Franklin OnChain U.S. Government Money Fund, which records fund shares on the blockchain, marking one of the earliest explorations of digitizing traditional registered funds. By 2024, BlackRock launched BUIDL, investing in U.S. government bonds, cash, and repurchase agreements, quickly growing to nearly $3 billion in scale, covering over eight public chains, and approved by several derivatives platforms as eligible collateral. Franklin Templeton's BENJI is the world's first U.S. registered mutual fund using a public chain as its official registration system, with a scale of about $828 million. JPMorgan also launched two tokenized money market funds, MONY and JLTXX, between the end of 2025 and May 2026.

What’s particularly noteworthy is this latest step. JPMorgan's JLTXX is directly deployed on the Ethereum public chain, specifically designed to meet the reserve needs of stablecoin issuers under the U.S. stablecoin regulatory framework known as the "GENIUS Act." This indicates that a new closed loop is forming: stablecoins require compliant reserve assets, reserve assets enter money market funds, money market funds generate returns, and fund shares can then enter on-chain trading and settlement networks. This is no longer just about "funds going on-chain"; it signifies that traditional financial assets are beginning to transform into the underlying assets of the digital currency system. For institutions like BlackRock, Franklin Templeton, and JPMorgan, the significance of tokenization is no longer merely launching a new fund but maintaining control over asset management in the next round of the digital financial system.

Europe and the UK: Rules First

While the U.S. competes on asset management scale, Europe focuses more on embedding this process within the existing regulatory framework.

French company Spiko is one of the earlier examples in Europe. In 2024, it launched two tokenized money market funds, investing in short-term government bonds in USD and EUR, becoming one of the first such products approved by the EU; in 2025, it completed a $22 million Series A financing, targeting corporate cash management as its main scenario—attempting to allow idle cash, which typically sits in bank accounts, to earn short-term government bond returns with lower friction. By 2026, traditional asset management giants began to follow suit: UK asset manager Schroders received regulatory approval in Ireland to launch on-chain share classes for its USD money market fund, executing redemptions and share transfers through JPMorgan's blockchain platform Kinexys, marking the transition of tokenization from an innovative project to a formal product line.

The UK is taking a different path. Rather than competing on the number of products, the Financial Conduct Authority (FCA) is more concerned with whether existing financial market rules need to be adjusted once funds, bonds, trading, and settlement enter the digital environment. The position the UK seeks is closer to the role London has played in global financial markets over the past few decades—not just providing products but also setting the rules for how the next generation of financial infrastructure operates.

Singapore: Funds as Collateral

Singapore's progress in this area has been quicker than many expected. In November 2025, Franklin Templeton and DBS Bank jointly launched Singapore's first money market fund using tokenized registration—the Franklin Onchain U.S. Dollar Short-Term Money Market Fund, approved by the Monetary Authority of Singapore, initially open to DBS wealth clients and qualified investors.

The real turning point came later. In September 2025, DBS, Franklin Templeton, and U.S. blockchain company Ripple reached a collaboration to explore using tokenized money market funds paired with the stablecoin RLUSD to provide trading and lending solutions. DBS plans to allow eligible clients to trade fund shares and further use them as collateral for loans. In June of this year, Singapore's quantitative fund Calais used a tokenized UBS money market fund share as collateral for over-the-counter settlement to support crypto asset trading on Bybit—another significant case of tokenized money market funds entering the crypto trading settlement collateral system. These steps collectively indicate that the true commercial value of tokenized money market funds may not lie in the yield itself but in their potential to become a new high-quality digital collateral. Once money market funds can be used as collateral, lent, and settled, their role shifts from being an "investment product" to being part of "financial infrastructure."

Hong Kong: 24/7 Availability

Hong Kong has also made significant strides in the past six months. On April 20, 2026, the Hong Kong Securities and Futures Commission announced a new regulatory framework allowing tokenized investment products recognized by the Commission to be traded on licensed virtual asset trading platforms in the secondary market, with the first products expected to be primarily tokenized money market funds. The Executive Director of the SFC's Intermediaries Division, Yip Chi-hang, stated that this is the world's first mechanism providing a clear regulatory framework for the secondary market trading of tokenized funds.

The weight of this statement lies in the fact that previously, both BUIDL and the tokenized fund BENJI were essentially "redemption-driven" products, where investors could only subscribe and redeem at net asset value, unable to trade like stocks or ETFs. What Hong Kong is doing this time is transforming money market funds from "on-chain holding financial products" into standardized digital securities that can be traded 24/7, aligning trading logic more closely with ETFs and LOFs. The CEO of the SFC, Ashley Alder, explained that the new measures allow traditional securities products to be tokenized and traded during nights and weekends, providing around-the-clock liquidity through regulated stablecoins and tokenized deposits.

Data confirms the speed of this shift. Since the Hong Kong SFC first defined the tokenized regulatory framework at the end of 2023, by March 2026, 13 tokenized products had been publicly offered, with total assets under management growing about sevenfold within a year to reach HKD 10.7 billion; data from the Hong Kong Financial Development Council shows that the market value of tokenized funds in Hong Kong surged from about $2 billion in 2024 to over $8 billion in 2025. The HKMA's tokenized asset sandbox project, Project Ensemble, has also entered a new phase, exploring tokenized asset trading, including money market funds, and using tokenized deposits for settlement—indicating that the concerns of Hong Kong regulators have shifted from "how to digitize fund shares" to "how to settle funds after digitization," with the former being product innovation and the latter being infrastructure innovation.

Specifically regarding issuers, there is more than one player leading the way. In February 2025, Huaxia Fund (Hong Kong) launched the first tokenized fund for retail investors in the Asia-Pacific region—the Hong Kong Dollar Digital Currency Fund, followed by the launch of the U.S. Dollar Digital Currency Fund and the Renminbi Digital Currency Fund in July of the same year, making the Renminbi Digital Currency Fund the world's first. By now, Huaxia Fund (Hong Kong) has established a series of tokenized funds in Hong Kong Dollar, U.S. Dollar, and Renminbi. Southern Eastern Capital partnered with HSBC in June this year to launch a non-listed tokenized category of the Hong Kong Dollar money market ETF and signed a memorandum of cooperation with the Hong Kong virtual asset trading platform OSL, representing traditional large issuers following up after the regulatory opening. Additionally, there are licensed wealth tech platforms taking a lightweight cooperative approach—Fosun Wealth's Xinglu Technology Finloop has integrated a digital share product FUIDL, anchored to an AAA-rated U.S. money market fund, into the Conflux network. Such collaborations are also meaningful for public chains—as more traditional assets go on-chain, public chains have the opportunity to move from merely facilitating digital asset trading to participating in the infrastructure of real financial asset circulation.

From Huaxia Fund (Hong Kong)'s multi-currency layout to Southern Eastern Capital's traditional approach with HSBC and OSL, and to Finloop's lightweight collaboration with public chains, the past six months in Hong Kong have seen asset management institutions, banks, trading platforms, and public chains all seeking their positions under the same new rules—it doesn't necessarily need to have the largest money fund scale globally but can compete for the intermediary node of digital cash flow in Asia.

The Most Direct Changes

The previous examples may seem like a game among institutions, but products have already been placed in front of ordinary investors. Huaxia Fund (Hong Kong)'s Hong Kong Dollar Digital Currency Fund is open for subscription to retail investors; Singapore's DBS tokenized money market fund has a threshold for wealth clients and qualified investors, which is not an unreachable exclusive product for institutions.

For these investors, the most direct changes are twofold: first, the time window for subscriptions and redemptions has shifted from "bank working days" to "anytime," meaning idle funds no longer have to wait until Monday to be moved; second, these products are essentially still money market funds investing in short-term government bonds and bank deposits, with yield and risk levels not significantly different from traditional money market funds, just with an added layer of a digital shell that can be traded anytime and accepted as collateral by platforms. In other words, ordinary investors do not need to understand blockchain to indirectly enjoy the liquidity benefits brought about by this competition for entry—what truly needs to be clarified is who the issuers and custodians of this "digital shell" are, as this determines whose rules the money ultimately falls under.

Who Gets the Ticket

The U.S. has proven that asset management giants can move funds on-chain, Europe is incorporating this into formal regulatory systems, banks in Singapore are already using it as collateral, and Hong Kong has integrated issuers, banks, and trading platforms within the same market. While these four paths seem different, they all point to the same thing: money market funds are transitioning from a "tool for earning returns" to an intermediary layer in the institutional digital capital system. The largest players in the U.S. have gained a first-mover advantage, but not every rule can be set by them.

Once it truly plays this role, its competitors will no longer be just another money market fund but also bank deposits, stablecoins, and short-term government bonds—more fundamental cash management tools. The real unanswered question is: as money market funds, bank deposits, and digital currencies gradually converge into the same network, will those who learn to use this network first get the ticket to entry before those with the most money?