JPMorgan analysts led by managing director Nikolaos Panigirtzoglou project that tokenized money market funds are unlikely to capture more than 10% to 15% of the stablecoin market without regulatory changes, according to a report released by the firm. Currently, tokenized money market funds account for only around 5% of the stablecoin universe by market cap, despite offering investors yield. Stablecoins continue to dominate the crypto ecosystem as the preferred cash instrument, widely used for collateral management, trading, settlement, cross-border payments, and day-to-day liquidity management across centralized exchanges and decentralized finance protocols.
Regulatory Barriers to Growth
Tokenized money market funds face what JPMorgan analysts described as a "structural regulatory disadvantage" compared to stablecoins. Unlike stablecoins, tokenized money market funds are generally classified as securities and are therefore subject to securities law requirements including registration, disclosure, reporting obligations, and transfer restrictions. According to the analysts, these requirements make it harder to circulate onchain funds freely across the crypto ecosystem.
The main users of tokenized money market funds today are crypto-native investors looking to earn yield on idle cash and institutional investors seeking the operational benefits of tokenization, such as faster settlement and programmability, while remaining within traditional investor protection frameworks. The analysts expect these funds to continue growing faster than stablecoins because of their yield advantage. However, they do not expect that growth to fundamentally change the balance between the two markets.
"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," the analysts said.
Limited Regulatory Support
Regulatory support for tokenized money market funds has been limited so far. The Securities and Exchange Commission introduced a streamlined process earlier in 2026 for issuing onchain money market funds. The initiative is intended to simplify redemptions and reduce operational friction for funds using blockchain-based recordkeeping.
JPMorgan analysts also noted recent efforts by traditional financial firms and crypto-native companies to allow institutional investors to use onchain money market funds as off-exchange trading collateral. Under these arrangements, investors can post tokenized fund shares issued through regulated platforms while the underlying assets remain in regulated off-exchange custody. The value of those holdings can then be represented within a trading venue or crypto exchange, allowing institutions to earn yield on collateral while also using it for trading purposes.
However, the analysts described these developments as only "marginal" improvements and said they are unlikely to change the broader picture, "which puts tokenized money market funds at a structural regulatory disadvantage relative to stablecoins, preventing their seamless circulation and use across the crypto ecosystem."
