JP Morgan diagnosed the rapid spread of stablecoins as a substantial threat to traditional finance and proposed the tokenization of money market funds (MMF) as a survival solution for cash-like assets. As investors quickly move to stablecoins, undermining the competitiveness of existing financial products, MMF tokenization is drawing attention as a new response strategy.
JP Morgan strategist Teresa Ho mentioned that Goldman Sachs and New York Mellon Bank have begun tokenizing money market funds on a blockchain basis, and evaluated that "this is a turning point that presents new possibilities beyond simple digital transformation, in terms of collateral utilization and liquidity expansion".
Particularly, these movements appeared right after the passage of the US stablecoin regulation law 'GENIUS Act' signed by former President Trump, leading to analysis that institutional changes are promoting the reorganization of digital financial infrastructure.
The GENIUS Act aims to guide digital dollar usage within the institutional framework, characterized by integrating blockchain's speed and predictability into the traditional financial system. Consequently, competition between MMF and stablecoins is expected to intensify, and a major transformation in asset circulation structure is anticipated.
In a Bloomberg interview, Ho emphasized that "now investors can utilize MMF as collateral instead of cash or government bonds while simultaneously expecting interest income", highlighting that MMF is becoming a 'flexible asset'.
Meanwhile, the Treasury Borrowing Advisory Committee (TBAC), a US Treasury advisory body, has warned that the spread of stablecoins could reduce banks' government bond demand and contract credit supply. This leads to concerns that it could directly impact the MMF market investing in short-term government bonds.
Market experts are also paying attention to these changes. Peter Crane from Crane Data stated, "The market absorption rate of stablecoins is being underestimated", and predicted that changes could occur in the government bond market after the GENIUS Act.
Ng Shin Hong, representative of State Street Global Advisors, emphasized that "if Wall Street falls behind the tokenization trend, it could lose the initiative of cash assets to stablecoins", highlighting that the digital response strategy for traditional assets has become an unavoidable task.
