Original Author: Sanqing, Foresight News
Over the past week, several Wall Street institutions have almost simultaneously advanced their tokenized money market fund strategies. On May 12th, JPMorgan Chase announced it will launch its second tokenized money market fund, JLTXX, on Ethereum; on the same day, Payward, the parent company of Kraken, signed a strategic cooperation agreement with Franklin Templeton, planning to integrate the BENJI series of tokenized funds into the Kraken platform to serve as institutional collateral and cash management tools.
Shortly before this, BlackRock submitted another two applications for tokenized funds to the SEC, continuing to deepen its collaboration with Securitize. This concentrated series of actions reflects that regulatory expectations are rapidly driving supply-side deployments by institutions.
Wall Street's Pincer Maneuver: From Custody Backend to Frontend Collateral
Facing the same regulatory mandate, Wall Street giants are showing their fangs for devouring crypto liquidity from different angles.
The 'scale king' BlackRock, by partnering again with its long-term collaborator Securitize, submitted two new applications at once: one is the 'pure-blooded' tool BRSRV, designed specifically to meet the GENIUS Act requirements, with its investment scope strictly limited to short-term bonds of 93 days or less; the other is to tokenize its existing roughly $7 billion government money market fund, launching tokenized shares under BSTBL.
Given that it already manages approximately $65 billion in reserves for Circle, BlackRock is attempting to fully tokenize its massive traditional stablecoin custody business, downgrading native issuers to mere 'distributors' responsible for front-end issuance.
JPMorgan Chase followed closely with its launch of JLTXX (Chain Liquidity Token Fund). This product, operating on its own Kinexys (formerly Onyx) platform and initially launched on Ethereum, explicitly states in its prospectus that it aims to meet the reserve requirements of stablecoin issuers.
JPMorgan is eyeing the future banking path. As the GENIUS Act carves out a clear pathway for banks to issue stablecoins, JLTXX is essentially preparing for the future, aiming to become the standard clearing and reserve backend when future GSIBs (Global Systemically Important Banks) enter the market to issue stablecoins.
In contrast, the partnership between Franklin Templeton and crypto exchange Kraken steps beyond the pure reserve approach of the first two, intending to bridge retail and collateral. The core of their cooperation lies in integrating BENJI (the tokenized money fund) into Kraken to serve as collateral for institutional trading and a cash management tool.
Since the future CLARITY Act may prohibit stablecoins from directly paying interest, tokenized assets like BENJI, which can both generate yield and serve as underlying collateral, coupled with Kraken's clientele including exchanges and xStocks, cleverly circumvent the stablecoin yield ban. The hand of traditional asset management is reaching directly into the collateral layer of crypto-native trading.
Furthermore, during the same period, Morgan Stanley also launched an MSNXX fund that meets compliant reserve requirements but did not utilize any on-chain settlement technology. Under the same compliance framework, whether or not to be on-chain has become a dividing line for differentiation among giants. Merely meeting compliance is insufficient; the 24/7 liquidity and asset composability brought by on-chain settlement are the true moat for the next generation of dollar reserves.
The GENIUS Act Delineates a Market
On July 18, 2025, US President Trump signed the GENIUS Act into law. Article 4 of the Act provides a concise yet clearly bounded list of 'qualified reserve assets': Federal Reserve account balances, insured deposits, U.S. Treasury securities with a remaining or original maturity of 93 days or less, overnight repurchase agreements collateralized by U.S. Treasury securities, and government money market funds that invest solely in the aforementioned assets.
For every dollar of stablecoin issued, it must be backed 1:1 by the above assets, and any payment of interest or yield to holders is prohibited. The rules are simple but build a clear product boundary around 'qualified reserves'.
Last June, Treasury Secretary Besant told the U.S. Senate Appropriations Subcommittee that reaching a $2 trillion stablecoin market is 'a very reasonable figure.' Citi's prediction is $1.9 trillion in a base case and $4 trillion in an optimistic case by 2030; Standard Chartered estimates that the tokenized money market fund segment alone will reach $750 billion by then. Even conservatively, this 'qualified reserve' compliance threshold has already framed a demand pool worth several trillion dollars.
The implementation rules for the GENIUS Act must be finalized by July 18, 2026, with the Act taking full effect no later than January 18, 2027. Rulemaking by regulatory agencies such as the OCC and FDIC is progressing intensively. The supply side cannot afford to wait until then to act.
The CLARITY Act is Another Piece of the Puzzle
The U.S. Senate Banking Committee is scheduled to conduct a markup review of the CLARITY Act on May 14th. This Act complements the GENIUS Act. GENIUS regulates stablecoin issuance, while CLARITY delineates the digital asset market structure and the jurisdictional boundaries between the SEC and CFTC.
There is a crucial interface between the two. While the GENIUS Act prohibits stablecoins from paying interest to holders, the draft text of the CLARITY Act distinguishes between active business incentives and passive yield, also leaving some room for yield for non-stablecoin tokenized assets.
This firewall precisely allows tokenized money market funds like BENJI to become on-chain yield-generating cash management tools outside of stablecoins. They are not stablecoins, not subject to the yield prohibition, yet can similarly be used for real-time settlement, as collateral, and transferred 24/7. The commercial logic behind Kraken's integration of BENJI is built upon this gap in the regulatory architecture.
Whether the CLARITY Act progresses as scheduled will also determine the completeness of this business framework.
