JPMorgan, BlackRock, Morgan Stanley, Franklin Templeton, and a consortium of five regional banks have each launched dedicated tokenized fund or deposit products targeting a single prize: managing the reserves that back $323 billion in outstanding stablecoins. The GENIUS Act, signed into law in Ju...
"Innovation in digital assets should strengthen, not displace, the regulated banking system. Tokenised deposits, built on sound blockchain infrastructure, can modernize payments while keeping insured deposits at the core of economic activity." — Gene Ludwig, CEO of Cari Network and former U.S. Comptroller of the Currency
JPMorgan, BlackRock, Morgan Stanley, Franklin Templeton, and a consortium of five regional banks have each launched dedicated tokenized fund or deposit products targeting a single prize: managing the reserves that back $323 billion in outstanding stablecoins. The GENIUS Act, signed into law in July 2025, mandates that stablecoin issuers hold 1:1 reserves in cash, short-term Treasuries, or qualifying money market funds — creating a captive demand pool that did not exist 12 months ago.
The resulting competition splits along two axes. Asset managers (BlackRock, JPMorgan, Franklin Templeton, Morgan Stanley) are issuing tokenized money market fund shares on public blockchains — effectively repackaging Treasury bills as ERC-20 tokens that stablecoin issuers can hold as compliant reserves. Regional banks (Huntington, M&T, KeyCorp, First Horizon, Old National) are taking a different path: tokenizing FDIC-insured deposits on a permissioned ZK-rollup to offer a bank-native alternative to stablecoins themselves. The two strategies share blockchain rails but compete for the same capital flows.
Combined AUM across the five largest tokenized reserve-eligible funds exceeded $7 billion in May 2026. The stablecoin reserve addressable market — assuming full compliance — ranges from $250 billion to $320 billion depending on the share held in non-fund instruments (cash, direct Treasury holdings). The current capture rate stands at approximately 2-3%.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), signed in July 2025, established the first federal regulatory framework for dollar-linked payment stablecoins. Section 4 of the statute specifies eligible reserve assets:
The final bullet — permitting tokenized forms of eligible reserves — is the regulatory catalyst driving institutional product launches. Prior to the GENIUS Act, stablecoin issuers (Tether, Circle, Paxos) managed reserves through conventional custody arrangements. The new framework permits on-chain representation of reserve assets, creating demand for blockchain-native Treasury exposure products.
The OCC issued its proposed implementing rule in March 2026. The FDIC followed with its own proposal in April 2026. Both agencies require issuers to demonstrate reserve adequacy through real-time attestation mechanisms — a requirement that favors on-chain instruments over opaque omnibus accounts.
BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), tokenized by Securitize, reached $2.5 billion in AUM as of May 2026. Launched in March 2024 with a $100 million seed, BUIDL has distributed over $100 million in cumulative dividends. The fund operates across multiple public blockchains and invests in short-term Treasuries and overnight repos.
In May 2026, BlackRock filed for two additional products:
BlackRock Daily Reinvestment Stablecoin Reserve Vehicle — A new fund explicitly designed for stablecoin reserve compliance. Issues "OnChain Shares" through a permissioned system connected to multiple public blockchains. $3 million minimum investment. Securitize Transfer Agent LLC maintains ownership records.
BSTBL (BlackRock Select Treasury Based Liquidity Fund) — An onchain share class for an existing $6.9 billion money market fund. BNY Mellon maintains ownership records on Ethereum using ERC-20 token standards.
Combined potential AUM across BlackRock's tokenized product suite: $9.4 billion if BSTBL's full NAV migrates on-chain.
JPMorgan Asset Management launched its first tokenized money market fund, My OnChain Net Yield Fund (MONY), in December 2025 with $100 million in proprietary capital on Ethereum. On May 13, 2026, JPMorgan filed for a second fund: the OnChain Liquidity-Token Money Market Fund (JLTXX).
JLTXX is explicitly designed as a GENIUS Act-compliant reserve asset for stablecoin issuers. It invests exclusively in short-term U.S. Treasuries and overnight repurchase agreements. Tokenization is powered by JPMorgan's Kinexys Digital Assets platform. Qualified investors access the fund through Morgan Money, JPMorgan's open-architecture liquidity management system. Anchorage Digital participates as custodial partner.
Settlement time: minutes, versus one to two business days for conventional money market fund shares.
On April 23, 2026, Morgan Stanley Investment Management launched the Stablecoin Reserves Portfolio (MSNXX) as part of the Morgan Stanley Institutional Liquidity Funds trust. The fund is a government money market fund investing only in cash, Treasury bills with maturities under 93 days, and overnight Treasury-collateralized repos.
MSNXX is positioned as a turnkey compliance solution for stablecoin issuers seeking to satisfy GENIUS Act reserve mandates. The fund maintains a stable $1.00 NAV and offers daily liquidity.
Franklin Templeton's OnChain U.S. Government Money Fund (FOBXX), represented by BENJI tokens, reached approximately $1.6-$1.98 billion in AUM by April-May 2026. Launched in 2021 as the first U.S.-registered mutual fund using public blockchain as its transaction ledger, BENJI operates across nine chains: Stellar, Ethereum, Polygon, Avalanche, Arbitrum, Aptos, Base, Solana, and BNB Smart Chain.
FOBXX maintains a $1.00 NAV per BENJI token and qualifies as an eligible reserve asset under Section 4 of the GENIUS Act.
Five U.S. regional banks announced the Cari Network in March 2026 to issue tokenized deposits on a permissioned blockchain:
| Bank | Total Assets | |------|-------------| | Huntington Bancshares | $225 billion | | M&T Bank | $214 billion | | KeyCorp | $184 billion | | First Horizon | $84 billion | | Old National Bancorp | $72 billion | | Combined | $779 billion |
The network runs on Prividium, a private ZK-rollup built by Matter Labs (the firm behind ZKsync) anchored to Ethereum. Only approved participants can transact. Regulators retain audit access.
Cari tokens remain liabilities of the issuing bank, preserving FDIC insurance eligibility. Unlike stablecoins issued by non-bank entities, Cari deposits do not require separate reserve backing — they are the reserve. The pilot targets Q3 2026 launch with full availability in Q4.
The strategic logic: if banks can offer programmable, instant-settling, FDIC-insured deposits, the value proposition of non-bank stablecoins narrows to use cases where bank access is unavailable (unbanked populations, sanctioned jurisdictions, pseudonymous transactions).
In April 2026, Custodia Bank (Wyoming), Vantage Bank (Texas), and Participate announced a collaboration to use tokenized deposits for loan participation settlement across Participate's network of 600+ community banks. Loan participations that previously required 3-5 business days to clear through correspondent banking now settle in minutes.
This initiative targets a different market segment (inter-bank lending operations) but demonstrates the same infrastructure thesis: tokenized bank deposits as a payment rail competing with both legacy ACH/wire systems and non-bank stablecoins.
The competitive landscape reveals divergent infrastructure choices:
| Entity | Blockchain | Token Standard | Access Model | |--------|-----------|---------------|--------------| | BlackRock BUIDL | Multi-chain (Ethereum, others) | ERC-20 | Permissioned investor, public chain | | BlackRock BSTBL | Ethereum | ERC-20 | Permissioned via BNY Mellon | | JPMorgan JLTXX | Ethereum | Kinexys-native | Permissioned via Morgan Money | | Morgan Stanley MSNXX | Not disclosed | — | Traditional fund structure | | Franklin Templeton BENJI | 9 chains | Multi-standard | Public | | Cari Network | Prividium (ZK-rollup, Ethereum L2) | Proprietary | Permissioned, bank-only | | Custodia/Participate | Proprietary | Tokenized deposits | Permissioned, bank-only |
Ethereum dominates as the settlement layer for asset manager products. JPMorgan's choice of public Ethereum over its own private Onyx/Kinexys chain for client-facing tokenized funds marks a strategic concession to interoperability demands. BlackRock's multi-chain approach via Securitize hedges against chain concentration risk.
The bank consortium chose a permissioned ZK-rollup specifically to maintain privacy of transaction data while inheriting Ethereum's security guarantees through periodic state proofs posted to L1.
Total stablecoin market capitalization as of May 2026: $323 billion (per DefiLlama, KuCoin Research).
Composition:
Under the GENIUS Act, licensed U.S. issuers (Circle, Paxos, PayPal, and future entrants) must hold qualifying reserves. Tether, domiciled outside the U.S., faces compliance pressure if it seeks to maintain U.S. market access. The directly addressable market for U.S.-regulated reserve products is estimated at $130-$160 billion (USDC + U.S.-regulated issuers), with potential expansion to $250 billion+ if Tether restructures.
Current tokenized fund AUM targeting this market:
| Fund | AUM (May 2026) | |------|----------------| | BlackRock BUIDL | $2.5 billion | | Franklin Templeton BENJI | ~$1.8 billion | | JPMorgan MONY | $100 million+ | | JPMorgan JLTXX | Filing stage | | Morgan Stanley MSNXX | Launched April 2026 | | BlackRock Stablecoin Reserve Vehicle | Filing stage | | Total launched | ~$4.4 billion |
The gap between current AUM ($4.4 billion in launched tokenized reserve-eligible funds) and the addressable market ($130-$250 billion) implies a 30-60x growth runway — assuming regulatory enforcement drives compliance and stablecoin issuers shift from direct Treasury custody to fund-based structures.
$323 billion stablecoin market creates a new category of institutional demand. The GENIUS Act's reserve mandate converts what was an unregulated practice (stablecoin issuers self-custodying Treasuries) into a regulated fund management opportunity.
Five Wall Street firms have launched or filed tokenized products in the past six months. BlackRock ($2.5B AUM), Franklin Templeton ($1.8B), JPMorgan ($100M+), and Morgan Stanley (newly launched) are competing for reserve management mandates. BlackRock leads on AUM; JPMorgan leads on integration with existing institutional infrastructure.
Regional banks are pursuing a substitution strategy rather than a service strategy. The Cari Network's tokenized deposits do not serve stablecoin issuers — they aim to replace stablecoins by offering equivalent functionality (programmable, instant settlement) within the regulated banking system. This positions banks as competitors to, not service providers for, the stablecoin industry.
Ethereum is the consensus settlement layer for asset managers. Four of five major tokenized fund products use Ethereum as primary or sole chain. Franklin Templeton's nine-chain strategy is the outlier.
The capture rate is still under 3%. Current tokenized fund AUM represents a fraction of the stablecoin reserve opportunity, suggesting the institutional build-out is in early stages despite the pace of product launches.
Infrastructure fragmentation persists. Kinexys (JPMorgan), Securitize (BlackRock), Prividium (Cari), and direct integrations (Franklin Templeton) each represent distinct technology stacks. Interoperability between these systems remains unresolved.
The GENIUS Act converted stablecoin reserve management from an operational necessity into a contestable market worth $130-250 billion in potential AUM. Wall Street's response has been rapid: five major institutions launched or filed dedicated products between December 2025 and May 2026.
The competitive dynamics bifurcate along institutional type. Asset managers compete to become the preferred reserve custodian for stablecoin issuers — essentially offering a compliant wrapper around Treasury exposure with on-chain transferability. Banks compete to render stablecoins unnecessary by replicating their functionality (programmability, instant settlement, 24/7 availability) within the existing deposit insurance framework.
Both strategies share a common assumption: that the $323 billion stablecoin market will continue growing and that regulatory compliance will drive demand for institutional-grade reserve infrastructure. The current 2-3% capture rate indicates the competition is in its earliest phase. The winners will be determined by execution speed, interoperability, and — most critically — which stablecoin issuers choose which reserve products when enforcement deadlines arrive.