Tokenized money market funds are reshaping finance. They blend the security of traditional investments with the speed of blockchain.

Asset managers like abrdn and Franklin Templeton are leading the innovation. They have worked with blockchain experts to create funds that offer better liquidity, faster settlements, and broader access. A new Digital Opportunities (or DigOpp) report reveals that 40% of these funds remain off-limits to U.S. investors. Regulatory hurdles are stifling progress in the world's largest market. Can using blockchain help to cut through the red tape?

Tokenized money market funds are a hot topic in the financial world, and for good reason. They offer the best of both worlds: the security of traditional investments and the speed and efficiency of blockchain technology.

As asset managers like abrdn and Franklin Templeton delve deeper into tokenization, aiming to broaden access and reduce operational costs, their efforts are now coming to light with the release of DigOpp's report. However, the report reveals a surprising statistic—41% of these funds remain inaccessible to U.S. investors. This poses a significant barrier to the integration of tokenized money market funds in the world's largest market.

Can the use of blockchain help to cut through the red tape and facilitate the entry of tokenized money market funds into the U.S. market?

Tokenized funds could be pivotal in redefining our money markets, encompassing bonds, gilts, and debt securities. But first, it's crucial to grasp the basics of what tokenized money market funds are and how they operate before we can explore potential solutions.

What Are Tokenized Money Market Funds (MMFs), and How Do They Work?

Introduced in the 1970s, money market funds, also known as real-world asset (RWA) tokenized funds, offer low-risk investment options that focus on short-term debt instruments like treasury bonds. These funds are designed to provide liquidity and stability, rendering them highly congruent with the investment preferences of a large portion of the population. However, traditional models of money market funds are encumbered by inherent inefficiencies, including lengthy settlement times and high operational costs. This is commonly observed with T+1, T+2, and frequently T+3, referring to the business days required to settle the payment.

Tokenization solves these issues by digitizing fund ownership, enabling almost immediate transactions, fostering greater transparency, and facilitating fractional ownership.

Why Are Big Players Like abrdn and Franklin Templeton Getting In?

Major financial institutions are recognizing tokenization as a key factor that could significantly decrease settlement times. Early last year, a Disruption Banking story highlighted how central bank digital currencies (CBDCs), leveraging blockchain technology, could eliminate intermediaries in international trade transactions, ultimately reducing processing times from days to seconds. This shift has drawn interest from firms like abrdn and Franklin Templeton, who are seeking faster, more cost-effective financial operations.

Early in 2023, abrdn took a step toward this transformation by tokenizing its money market fund on the Hedera blockchain. The firm partnered with Archax to launch institutional-grade tokenized investments, exceeding initial market expectations. The company chose Hedera because of its ability to process high transaction volumes quickly and ensure that fund settlements occur almost instantly.

Meanwhile, Franklin Templeton, which manages $1.4 trillion in assets, has expanded its Franklin OnChain U.S. Government Money Fund (FOBXX) to Aptos, adding to its existing integrations with Stellar, Polygon, Avalanche, Arbitrum, Base, Ethereum and, more recently, Solana. The company aims to make its tokenized funds available across multiple blockchain networks to increase accessibility.

Are Tokenized Money Market Funds a Success?

In a 2025 Disruption Banking story, Franklin Templeton CEO Jenny Johnson described tokenization as “securitization on steroids,” emphasizing its potential to redefine finance. The report noted, “FOBXX has been a harbinger of things to come for the tokenization of Real World Assets (RWAs), which currently sits at nearly $18 billion, according to data from tokenized real-world assets tracker, RWA.xyz.

It’s strategy is paying off — Franklin Templeton’s tokenized fund now holds over $500 million in assets. The firm’s ability to operate across multiple blockchains has set a new standard in the industry, making tokenized money market funds a more viable investment option worldwide.

RWA value across segments. Source: RWA.xyz

The DigOpp Report: Why Are 41% of Funds Off-Limits to U.S. Investors?

DigOpp — a specialized financial firm that designs investment products and manages digital asset funds — released a report in January 2025. The report provides an in-depth look at the state of tokenized money market funds. Analyzing 37 different products, the study compares their underlying assets, blockchain platforms, and investment structures. Most of these funds invest in fixed-income securities, primarily with bonds less than one year in maturity, including reverse repos, corporate paper, and t-bills.

The report suggests that many of these products are more accurately described as “tokenized cash alternatives” rather than traditional money market funds.

One of the most significant findings in the report is that 41% of these funds remain restricted to U.S. investors. This is a significant regulatory hurdle. The report states how “U.S. regulators are a problem