J.P. Morgan Launches First Tokenized Money Market Fund on Ethereum, Bringing $4T Giant On-Chain

Key Takeaways:

• J.P. Morgan Asset Management has launched its first tokenized money market fund, MONY, on Ethereum.
• The fund gives qualified investors on-chain access to U.S. Treasury-backed yields via tokens.
• The move marks the largest GSIB bank to bring a money market fund onto a public blockchain.

J.P. Morgan Asset Management has taken a major step into on-chain finance by launching its first tokenized money market fund on Ethereum. The product, called My OnChain Net Yield Fund (MONY), gives qualified investors direct blockchain-based exposure to traditional U.S. dollar yield products.

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J.P. Morgan Brings Money Market Funds to Public Blockchains

J.P. Morgan Asset Management announced the launch of MONY as a 506(c) private placement fund, making it available exclusively to qualified and accredited investors. The fund is deployed on the public Ethereum blockchain and is powered by Kinexys Digital Assets, J.P. Morgan’s multi-chain tokenization infrastructure.

This launch makes J.P. Morgan the largest global systemically important bank (GSIB) to introduce a tokenized money market fund on a public blockchain. Until now, most tokenized funds from major banks have been limited to private or permissioned ledgers. Selecting Ethereum, J.P. Morgan indicates that it is increasing its trust in the public blockchain infrastructure as a financial product at an institutional level.

MONY can be provided via Morgan Money®, which is the institutional liquidity trading and analytics platform of J.P. Morgan Asset Management. Through the platform, investors can subscribe to funds and get fund tokens directly deposited into their blockchain wallets, forming a smooth transition between the established financial systems and on-chain settlement.

How MONY Works and What It Offers Investors

MONY only invests in the U.S. Treasury securities and repurchase agreements fully secured by Treasuries. This design is similar to the conservative risk level of the traditional money market funds that most institutions use in liquidity management and capital-preservation.

The difference between MONY is the ownership and settlement. The investors are presented with tokens that are based on blockchain technology to reflect their positions in the funds instead of conventional fund shares in centralized systems. These tokens enable:

• On-chain transparency into ownership
• Peer-to-peer transferability between eligible parties
• Potential use as collateral in future blockchain-based financial workflows

The fund allows a daily reinvestment in dividends, and therefore, the yields will grow automatically. The Morgan Money platform enables investors to get in and out at their convenience via subscriptions and redemptions via either cash or stablecoins.

On-Chain Yield Meets Institutional Liquidity

This tokenization of a money market fund is tantamount to J.P. Morgan putting one of the most conservative financial products into a programmable environment. Although MONY is not structured to allow retail participation, it is structured to enable more rapid settlement, greater operational efficiency, and interoperability with other on-chain financial products in the future.

The underlying assets and risk profile remain the same but the way the fund can interoperate with blockchain infrastructure is modified by the tokenization. This may ultimately lower collateral management, liquidity flow, and cross-platform integration of institutional investors.

Ethereum as the Backbone of Tokenized Financial Products

It is significant that MONY is deployed on Ethereum. Ether is still the leader of blockchains of tokenized real world assets, including stablecoins, tokenized treasuries, and institutional settlement pilots.

The size of the Ethereum developer ecosystem, the well-developed tooling, and the long-standing security track record make it the solution of choice among banks that want to experiment with on-chain financial products. In the case of J.P. Morgan, wider interoperability is also possible with a public blockchain than with a private ledger, despite the lack of availability to the fund itself.

Read More: JPMorgan’s Kinexys Enters New Phase as Marex Launches First Real-Time Blockchain Settlements

The rationale behind this launch is in line with a larger trend of traditional asset managers exploring public blockchains not as speculative environments, but as financial infrastructural layers.

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