The Bank for International Settlements (BIS) has revealed a significant surge in assets within tokenized money market funds, rising from $770 million to nearly $9 billion by late 2025. This rapid growth highlights the increasing integration of traditional finance into crypto ecosystems. However, these funds face challenges like liquidity mismatches and operational risks, prompting concerns among regulators. The BIS cautions on fund redemption and potential market stress during times of volatility.
While offering flexibility similar to stablecoins, tokenized funds bring substantial risks. The mismatch between daily redemption demands and T+1 settlement practices for underlying assets could exacerbate market stress when faced with sudden sell-offs or liquidity issues. The report calls attention to the need for robust solutions like Broadridge’s DLR system to mitigate these vulnerabilities.
This rapid expansion of tokenized funds presents opportunities but also highlights the importance of addressing risks associated with their use. Regulators are closely monitoring the developments, as the BIS emphasizes the critical role of risk management in fostering innovation within digital asset ecosystems.