Stablecoins retain the edge over tokenized money market funds, JPMorgan says The bank said tokenized money market funds account for only about 5% of the broader stablecoin universe despite offering yield.
What to know: – JPMorgan said tokenized money market funds remain a small share of the stablecoin market because of regulatory hurdles. – Stablecoins continue to dominate crypto trading, collateral and payments due to their seamless use across exchanges and DeFi. – The bank expects tokenized money market funds to grow, but likely not beyond 10%-15% of the stablecoin market without regulatory changes
Tokenized money market funds still make up only around 5% of the stablecoin universe despite their ability to generate yield, Wall Street bank JPMorgan said in a Wednesday report. The bank said crypto market participants continue to favor stablecoins because they have become the ecosystem’s default cash instrument for trading, collateral management, settlement, cross-border payments and liquidity management across centralized exchanges (CEX) and decentralized finance (DeFi) protocols. According to the report, money market funds face a “structural regulatory disadvantage” because they are classified as securities, subjecting them to registration, disclosure, reporting and transfer restrictions that limit their ability to circulate freely within the crypto ecosystem. “We doubt that tokenized money market funds would grow beyond 10%-15% or so of the stablecoin universe, unless there is a regulatory change that reduces the structural disadvantage arising from tokenized money market funds classified as securities,” wrote analysts led by Nikolaos Panigirtzoglou.
As a result, the bank’s analysts said demand for tokenized money market funds is largely confined to crypto-native investors seeking yield on idle cash and institutional investors looking to combine blockchain-based settlement and programmability with traditional investor protections. Advocates of tokenized money…