JPMorgan: Tokenized MMFs about 5% of stablecoin market

JPMorgan published a report on May 21, 2026, led by analyst Nikolaos Panigirtzoglou, that estimates tokenized money market funds account for roughly 5% of the broader stablecoin ecosystem. The report projects tokenized MMFs are unlikely to exceed about 10% to 15% of the market unless securities classification rules change to reduce transfer and compliance frictions.

The report cites examples of tokenized money market funds including BlackRock’s BUIDL, Franklin Templeton’s BENJI and Ondo’s USDY. These products offer materially higher yields than common stablecoins, in the range of about 4% to 4.8% annual percentage yield, while stablecoins typically pay little or no yield to holders.

JPMorgan identifies the primary constraint as the regulatory treatment of tokenized MMF shares as securities. That classification subjects fund shares to registration, disclosure, reporting and transfer restrictions. In practice, transfers often require know-your-customer checks, whitelist approvals, transfer permissions or specific redemption mechanics. Those requirements add integration costs and limit how freely the tokens move across exchanges, wallets and decentralized finance protocols.

The report estimates stablecoins retain roughly 95% of use as the default on-chain cash instrument. It cites first-quarter 2026 data showing USDC accounted for a majority of stablecoin transaction volume and notes the tokenized Treasury market had passed about $7 billion in assets under management.

Demand for tokenized MMFs is concentrated in two groups, the analysis finds. One group is crypto-native users who park idle cash in yield-bearing tokenized Treasury products while awaiting deployment. The other is institutional actors that want blockchain settlement and programmability together with investor protections offered by registered fund structures. JPMorgan also documents emerging arrangements that let institutions use tokenized MMFs as off-exchange collateral while earning yield.

Regulatory developments earlier in 2026, including an SEC effort to streamline issuance and redemption of on-chain money market funds, are described in the report as marginal improvements that do not remove the core classification issue. The analysis states that changing the market share outcome would require both a revision of the securities classification framework to permit lower-friction transfers of tokenized fund shares and broad integration work by exchanges, custodians and DeFi protocols to accept and route those tokens like stablecoins. The report notes both steps would need coordinated regulatory action and years of industry implementation.

The JPMorgan report presents tokenized money market funds as a growing, specialized product used for yield on idle cash and certain institutional purposes, while stablecoins continue to support most trading, settlement and DeFi liquidity because they transfer without per-transfer compliance overhead.