Goldman Sachs and BNY Mellon Lead Tokenization Push to Keep Money Market Funds Competitive Amid Stablecoin Growth
Wall Street is stepping up efforts to modernize traditional finance as stablecoins continue to gain ground. Goldman Sachs and BNY Mellon are at the forefront of a new tokenization initiative designed to help money market funds remain competitive in an increasingly digital financial landscape, according to JPMorgan strategist Teresa Ho.
In an interview with Bloomberg, Ho said the tokenization of money market fund shares—an effort backed by both banks—marks a critical move to preserve the appeal of “cash as an asset.” This comes as the growing adoption of stablecoins threatens to draw capital away from conventional short-term debt instruments.
“Instead of posting cash or Treasurys, you can post money market shares and not lose interest along the way. It speaks to the versatility of money funds,” Ho noted, emphasizing how tokenized assets can unlock new use cases like margin collateral.
Stablecoins Spur Financial Innovation
The push toward tokenized funds aligns with a broader shift following the recent passage of the U.S. GENIUS Act—a sweeping piece of legislation that officially recognizes stablecoins as legal tender. By integrating blockchain’s speed and transparency into the regulated financial system, the Act is expected to accelerate digital dollar adoption and further fuel competition between traditional and blockchain-based financial products.
JPMorgan analysts expect rivalry in this space to intensify as institutions respond to the rising influence of stablecoins.
Banking Industry on Alert
The banking sector has taken note. Earlier this year, the Treasury Borrowing Advisory Committee warned that increased stablecoin usage could reduce demand for U.S. Treasurys, potentially impacting credit growth. Since money market funds typically hold large volumes of Treasury bills, they could be directly affected by this shift in capital flows.
Peter Crane, president of Crane Data and a leading expert on money market funds, previously said the industry is watching stablecoins closely. However, he added that concerns about liquidity disruption may be overblown unless the stablecoin market expands significantly.
Still, some voices are calling for faster innovation. State Street Global Advisors President and CEO Yie-Hsin Hung cautioned recently that “cash will lose its crown” if traditional finance fails to embrace tokenization quickly.
GENIUS Act Opens the Door for Broader Tokenization
While stablecoins may seem like a threat to traditional funds, some see them as a catalyst for broader tokenization. Solomon Tesfaye of Aptos Labs said the GENIUS Act could ultimately benefit both sectors by creating more on-ramps to the digital asset economy.
Michael Sonnenshein, president of tokenization platform Securitize, told The Wall Street Journal that the new law gives asset issuers greater confidence to embrace blockchain without fear of regulatory uncertainty.
“For any issuers that have been hesitant to fully enter the world of tokenized securities, this now offers them some regulatory air cover,” Sonnenshein said.
Tokenized real-world assets (RWAs)—particularly U.S. Treasury bonds and private credit—are already one of blockchain’s fastest-growing segments. Excluding stablecoins, the tokenized RWA market has reached $25 billion across 256 issuers, according to data from RWA.xyz.
Looking ahead, Aptos’s Tesfaye believes tokenization will expand into even more complex assets like derivatives, intellectual property, and other niche instruments.
Featured image from: cointelegraph.com