Tokenized Money Market Funds 101: Liquidity Meets Yield

Key Takeaways

• Tokenized money market funds blend institutional yield with blockchain-based liquidity, enabling real-time access to capital.
• Traditional money market funds can be inefficient for modern, always-on markets.
• Circle’s USYC demonstrates how 24/7 redemptions into USDC can unlock institutional-grade, yield-bearing collateral at internet speed.

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Tokenized Money Market Fund

Money market funds are a cornerstone of modern finance — low-risk, yield-bearing instruments that provide liquidity and stability for institutional and corporate investors. As capital markets evolve toward a 24/7, digital operating model, a new chapter in this asset class is emerging. Tokenized money market funds combine the stability of traditional money market funds with the composability, transparency, and real-time settlement capabilities of blockchain networks.

In this way, tokenized money market funds represent a step change in collateral management.

From legacy liquidity to programmable capital: traditional money market funds vs. tokenized money market funds

Traditional money market funds are mutual funds that invest in short-term, high-quality debt securities such as US Treasury bills and repurchase agreements. They’re widely used by corporations, asset managers, and institutional investors to park cash while earning yield. However, they remain bound to legacy market hours and settlement rails. When capital is needed, redemption cycles can take a day or more. This lag creates operational friction for firms that increasingly require near-instant access to liquidity.

Tokenized money market funds modernize this model. They typically issue onchain tokens that serve as a digital representation of a share in a regulated money market fund, with the tokens recorded — and transferable — on a blockchain. This architecture makes capital programmable: investors can subscribe, redeem, or deploy liquidity in real time through APIs or smart contracts, without multiple intermediaries or batch processing delays.

This move to programmable capital is part of a larger shift that’s seen the value of USDC in circulation increase 71% year to date¹ as of November 10, 2025. As discussed in Circle’s 2025 State of the USDC Economy report, global treasury and payments operations are transitioning toward “always-on” infrastructure built around stablecoins and tokenized assets — reflecting a growing demand for liquidity that moves at internet speed.

Where traditional money market funds fall short in an onchain economy

Traditional money market funds deliver relative safety and predictable yield, but not near-instant access. In fast-moving markets, latency of even a few hours can limit trading efficiency, collateral mobility, and treasury agility. And traditional money market funds fail to meet the onchain moment in other ways, as well, including limited interoperability, operational overhead, and capital inefficiency:

• Offchain settlement restricts money market fund use in digital-asset markets, forcing institutions to maintain separate pools of cash and collateral.
• Manual subscription and redemption processes introduce reconciliation risk.
• Funds locked in daily cycles can’t be redeployed near instantly to seize trading or yield opportunities.

In short, legacy infrastructure falls short of the liquidity expectations of today’s global markets.

The evolution of regulated, tokenized access

A well-managed tokenized money market fund preserves the protections of its traditional counterparts — fund custody, audited reserves, and oversight by regulatory authorities — while enabling real-time interaction. Typically, investors in tokenized money market funds hold digital representations of fund shares, allowing them to earn daily yield onchain, settle redemptions 24/7, and integrate with DeFi through smart-contract interfaces.

Circle’s USYC² exemplifies this model. Each USYC token serves as a digital representation of a share of the Hashnote International Short Duration Fund Ltd., a Cayman Islands registered mutual fund primarily invested in US government reverse-repo agreements.

Unlike conventional funds with end-of-day cutoffs, USYC offers near-instant³ redemptions into USDC at any size, 24/7. This capability bridges two previously separate domains — yield-bearing capital and onchain liquidity — allowing institutions to earn yield while remaining fully liquid.

Why liquidity at speed matters

In both digital asset and traditional markets, capital efficiency determines competitiveness. Traders and market makers often need to post and reallocate collateral in seconds, not hours. Treasury teams increasingly expect the same. By making redemptions programmable and continuous, USYC enables:

• Onchain redemption directly into USDC, eliminating batch processing delays
• Continuous yield capture, where investors remain fully invested until the moment liquidity is needed
• Simplified operations with a single workflow for fund shares, stablecoins, and collateral

For example, an exchange or prime broker integrated with USYC can accept the token as trading collateral. When liquidity is needed elsewhere, the position can be redeemed immediately to USDC and redeployed, keeping funds productive around the clock.

Looking ahead to the next phase of money market funds

Tokenized money market funds represent the convergence of regulated finance and digital infrastructure. As stablecoins and tokenized assets become standard components of corporate treasuries, tokenized money market funds offer a bridge between yield generation and real-time liquidity.

For institutions accustomed to legacy settlement windows, the shift stands to be transformative. Over time, capital will flow toward instruments that combine regulatory assurance, yield, and 24/7 accessibility. Products like USYC illustrate how this evolution is already underway, turning static balance-sheet assets into dynamic, programmable liquidity.

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¹ According to CoinMarketCap the USDC market cap on January 1, 2025, was $44.39 billion. According to CoinMarkCap the USDC market cap on November 10, 2025 was $75.98 billion.

² USYC is a digital asset token. Each USYC token serves as a digital representation of a share of the Hashnote International Short Duration Fund Ltd. (the “Fund”), a Cayman Islands registered mutual fund. The Fund has appointed Circle International Bermuda Limited (“CIBL”), a Bermuda Monetary Authority licensed digital asset business, as its token administrator, responsible for the management of USYC on behalf of the Fund. As used herein, the term “near-instant” and “always” is intended to signify that, under ordinary operating conditions, redemption requests are filled on a near-real-time basis, subject to factors including, without limitation, blockchain network congestion and the Fund’s then-current liquidity position.

Shares of the Fund and USYC are only available to non-U.S. Persons, as defined under the Securities Act of 1933, as amended. Additional eligibility restrictions may apply. The information provided herein is solely for educational and informational purposes and should not be construed as an offer to sell or a solicitation of an offer to buy any security, financial instrument, or other product.

³ For near-instant redemptions, customers must sign up for a Private Teller; Private Teller fees apply in addition to Standard Fees. Near-instant redemptions may be limited by available liquidity.

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