Ethereum becomes the focal point: how major banks are redefining digital liquidity through tokenization

The choice of Ethereum as the underlying blockchain for the My OnChain Net Yield Fund (MONY) by JPMorgan is no coincidence. It represents an explicit recognition that financial instruments, volume, and institutional infrastructure have consolidated on this public network. While Ethereum (ETH) continues to hover around $3.16K, the move by the American bank with $4 trillion marks a turning point: Wall Street is not fighting the public blockchain; it is capturing it.

Why MONY Changes the Rules of the Game

On December 15, JPMorgan launched MONY on Ethereum, a tokenized money market fund structured as a 506© security. This is not a DeFi experiment: it is a strategic operation to control the flows of institutional liquidity currently parked in zero-yield stablecoins.

Traditional stablecoins like Tether and Circle operate under strict rules. The GENIUS Act, the US law on stablecoins passed earlier this year, explicitly prohibits issuers from paying interest directly to holders. This creates a structural opportunity cost: in an environment with 4-5% rates, corporate treasurers lose about 4-5% annually on idle balances.

MONY bypasses this limit. Structured as a private money fund and not as a payment stablecoin, it can invest in US Treasuries and collateralized repos, passing the underlying income back to subscribers. JPMorgan has capitalized the fund with about $100 million and promotes it directly to global liquidity clients through the Morgan Money platform.

The Arena of Tokenized Money Market Funds

JPMorgan is not competing alone. BlackRock has already demonstrated the model with BUIDL, accepted as collateral on major institutional platforms. Goldman Sachs and BNY Mellon have launched similar products. The competition is no longer about who innovates, but who captures the billions of institutional liquidity migrating from traditional systems to blockchain ecosystems.

The economic logic is transparent: instead of parking $100 million in static stablecoins, a trading fund or prime brokerage desk can hold the same amounts in money fund tokens, maintaining conservative portfolios of short-term government assets while enjoying the blockchain’s settlement speed. Settlement times shift from T+1 to intraday, without leaving the regulated perimeter.

How JPMorgan Cannibalizes Its Traditional Model

Here emerges the defensive strategy. By launching MONY on public infrastructure, JPMorgan is not fighting tokenization: it is countering it, even if this involves cannibalizing parts of its traditional deposit base. For a decade, fintech and crypto companies have eroded banking services like payments, FX, and custody. Stablecoins then attacked the core: liquidity and deposit management, offering a digital alternative operating entirely outside bank balance sheets.

The launch on Ethereum is the counterattack: bringing that migration back within the bank’s perimeter, but in tokenized form. George Gatch, CEO of J.P. Morgan Asset Management, positions the offering around “active management and innovation,” implicitly contrasting it with the passive model of stablecoin issuers.

The Two Levels of On-Chain Liquidity

MONY introduces an important division in dollar digital instruments. On the permissionless level, retail users, high-frequency traders, and DeFi protocols will continue relying on non-collateralized stablecoins like USDT and USDC. Their value lies in censorship resistance, universal composability, and cross-chain and protocol availability.

On the permissioned level, MONY and similar products offer regulated, yield-bearing liquidity equivalents to institutions prioritizing traceability, governance, and counterparty control over open composability. Tokens can only be held in allowlisted wallets and are subject to KYC; transfers are controlled to comply with securities regulations. Their liquidity is more subtle but more selective; use cases are limited but of higher value per dollar.

Wall Street’s Repositioning

Ultimately, this is not a revolution of the financial system. It is an internal reorganization. Traditional financial institutions are adopting public infrastructures—Ethereum foremost—not because they have capitulated to DeFi, but because public infrastructures have become too important to ignore.

If this competition among incumbents succeeds, the effect will not be the end of stablecoins nor the triumph of decentralized finance. It will be a silent reshaping: regulatory layers will be public, instruments will be tokenized, but the institutions that generate significant spreads on global liquidity will remain the same Wall Street names that dominated the previous era. Technology changes; the hierarchy of financial power, less so.