Under the guise of compliance, traditional asset management giants are attempting to pack their stablecoin reserves, which exceed hundreds of billions, into tokenized containers they have created.
Written by: Sanqing, Foresight News
Over the past week, several Wall Street institutions have almost simultaneously advanced their tokenized money market fund offerings. On May 12, JPMorgan Chase announced the launch of its second tokenized money market fund, JLTXX, on Ethereum. On the same day, Kraken's parent company, Payward, signed a strategic partnership with Franklin Templeton to integrate the BENJI series of tokenized funds into the Kraken platform for use as institutional collateral and cash management tools.
Shortly before this, BlackRock submitted two more applications to the SEC for tokenized funds, further deepening its cooperation with Securitize. This series of actions reflects that regulatory expectations are rapidly driving institutional supply-side strategic deployments.
Wall Street's pincer movement, from the custody back end to the front end of the mortgage.
Faced with the same regulatory directive, Wall Street giants have revealed their fangs, ready to devour Crypto liquidity, from different angles.
BlackRock, the "King of Scale," has once again joined forces with its long-term partner Securitize to submit two new applications: one is BRSRV, a "pureblood" instrument designed specifically to meet the GENIUS Act and with investment scope strictly limited to short-term debt within 93 days; the other is to put its approximately $7 billion government money market fund on-chain and launch a tokenized share, 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, relegating native issuers to "distributors" who are only responsible for front-end issuance.
JPMorgan Chase followed suit with JLTXX (On-Chain Liquidity Token Fund), a product that runs on its own Kinexys (formerly Onyx) platform and was first launched on Ethereum. The prospectus explicitly states that it is designed to meet the reserve needs of stablecoin issuers.
JPMorgan Chase is eyeing the future of banking. With the GENIUS Act paving the way for banks to issue stablecoins, JLTXX is essentially preparing for the future, attempting to become the standard clearing and reserve backend for GSIBs (Global Systemically Important Banks) when they enter the stablecoin issuance market.
In contrast, the partnership between Franklin Templeton and crypto exchage Kraken goes beyond the pure reserve approach of the former two, aiming to bridge retail and collateralization. The core of their collaboration lies in integrating BENJI (a tokenized money market fund) into Kraken, using it 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 interest and serve as underlying collateral, have cleverly circumvented the stablecoin yield ban by leveraging exchanges like Kraken and xStocks. Traditional asset management firms are now directly targeting the collateral layer of native Crypto trading.
Furthermore, during the same period, Morgan Stanley launched the MSNXX fund, which met compliance reserve requirements, but did not employ any on-chain settlement technology. Under the same compliance framework, whether or not to use on-chain technology has become a watershed moment for differentiated competition among industry giants. Merely meeting compliance requirements 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 defined a market.
On July 18, 2025, U.S. President Trump signed the GENIUS Act. Section 4 of the Act provides a concise but clearly defined list of "eligible reserve assets": Federal Reserve account balances, insured deposits, U.S. Treasury securities with a remaining or original maturity of no more than 93 days, overnight repurchase agreements secured by U.S. Treasury securities, and government money market funds that invest only in the aforementioned assets.
For every dollar of stablecoin issued, it must be backed 1:1 by the aforementioned assets, and the payment of any interest or yield to holders is prohibited. The rules are simple, but they establish a clear product boundary around the concept of "qualified reserves."
Last June, Treasury Secretary Bessant told the U.S. Senate Appropriations Subcommittee that a stablecoin market reaching $2 trillion was "a very reasonable figure." Citigroup predicts a base case of $1.9 trillion and an optimistic scenario of $4 trillion by 2030; Standard Chartered estimates that tokenized money market funds alone will reach $750 billion by then. Even conservatively speaking, the compliance threshold of "eligible reserves" has already defined a demand pool of trillions of dollars.
The implementation rules for the GENIUS Act must be finalized by July 18, 2026, and the Act will fully take effect no later than January 18, 2027. Regulatory bodies such as the OCC and FDIC are actively working on their own rules. The supply side cannot wait until then to take action.
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 14. This bill complements the GENIUS Act. GENIUS regulates the issuance of stablecoins, while CLARITY defines the structure of the digital asset market and the boundaries of SEC/CFTC jurisdiction.
There is a crucial interface between the two. The GENIUS Act prohibits stablecoins from paying interest to holders, while the draft text of the CLARITY Act distinguishes between business incentives and passive income, leaving some room for income generation for tokenized assets that are not stablecoins.
This firewall is precisely what allows tokenized money market funds like Benji to become on-chain yield-generating cash management tools, in addition to stablecoins. They are not stablecoins and are not subject to yield restrictions, yet they still allow for real-time settlement, can be used as collateral, and are transferable 24/7. Kraken's business logic in integrating Benji is built on this gap in the regulatory framework.
Whether the CLARITY Act can proceed as scheduled also determines the integrity of this business structure.
