Bank for International Settlements report: Tokenization of money market funds surpasses 9 billion USD.

According to Mars Finance, a recent report by the Bank for International Settlements (BIS) indicates that the total assets of tokenized money market funds have surged from $770 million at the end of 2023 to nearly $9 billion, becoming a key source of collateral in the encryption ecosystem. The agency warns that while such assets possess the “flexibility of stablecoins,” they also bring substantial operational and liquidity risks. The BIS identifies liquidity mismatch as the primary risk for tokenized money market funds. It points out that although investors can redeem tokenized fund shares on a daily basis, the underlying assets still adhere to the traditional T+1 settlement mechanism. During periods of market pressure, concentrated redemption demands will expose this structural risk. Subsequently, the organization notes that the market is still in its early development stages, with solutions continually being refined, such as the Distributed Ledger Repo (DLR) system launched by fintech company Broadridge, which enables same-day settlement for the transfer of tokenized government bonds.