How Tokenised Money Market Funds Work

A tokenised money market fund (“tokenised MMF” hereafter) writes the units of a traditional money market fund onto a blockchain. The underlying is typically short-dated government securities, repos and cash equivalents; the on-chain token represents fund units, not a new “high-yield coin”.

In 2026, products such as BlackRock BUIDL and Franklin Templeton’s Benji platform offerings have made this type of instrument the first stop for institutions entering RWA. In its April secondary trading framework, the SFC likewise expects the initial phase to be led mainly by tokenised money market funds.

What problem does it solve 

Traditional MMFs are already “boring” enough: the objective is principal-preserving liquidity management, not chasing price gains. Once tokenised, what institutions want is:

• The same short-dated fixed income portfolio, but with transfer and record-keeping available 24/7
• Subscription using regulated stablecoins or tokenised deposits
• Trading on licensed platforms rather than only within the fund manager’s business-day windows

Boring is a virtue. If an introduction markets it as “high on-chain yields”, the direction is wrong.

Five mechanisms that must align 

1. NAV (net asset value). Assets minus liabilities per unit. Tokenised MMFs typically aim to maintain a stable NAV close to USD 1.00 (or equivalent), but they are not deposits and are not protected by the deposit protection scheme.
2. Daily income. Coupons and discounts accrue at the fund level and are then distributed by issuance of additional units or adjustments to the NAV, as set out in the offering documents. When you see a “reference annualised 3.x%”, that is an estimate of the portfolio at that time, not a contracted rate.
3. Primary subscription/redemption. You place an order with the fund or an authorised distributor, it executes at the NAV on the valuation date, and cash and tokens settle on the agreed date. This is the product’s “official tap and drain”.
4. Secondary trading. Trades execute on the order book of an authorised VATP, and prices can deviate from the iNAV. Platforms should warn when the deviation is excessive. The secondary market lets you trade outside the fund’s valuation windows, but it also brings discounts and premiums.
5. Who holds the underlying bonds. Tokens sitting in your platform account or wallet do not automatically mean you directly hold US Treasury bills. The T-bills sit with the fund’s custodian bank; what you hold is a tokenised record of fund units.

How it differs from “on-chain deposits”, “algorithmic stablecoins” and “beneficial certificates” 

	Tokenised MMF	Bank deposits / tokenised deposits	Algorithmic or crypto-collateralised stablecoins
Legal nature	Fund units	Bank liability	Depends on the issuance arrangement
Source of return	Short-dated fixed income portfolio	Bank interest rates	Not necessarily any
Regulatory entry point	Fund and distribution rules	Banking law	Varies by jurisdiction
Objective	Cash management	Payments and savings	Medium of exchange

Describing an MMF as a stablecoin, or a stablecoin as an MMF, distorts suitability assessments.

Restrictions Hong Kong investors will actually encounter 

• Many tokenised MMFs are open only to Professional Investors in Hong Kong
• Even if a product is open to other clients overseas, that does not mean a Hong Kong VATP has been authorised to distribute it
• Enabling secondary trading requires the product provider and the platform to complete testing and market-making arrangements
• Which stablecoin can be used for subscription depends on the whitelists of the issuer and the platform

Understanding “distribution” rather than “endorsement” through a public case 

In June 2026, EX.IO announced that it had become one of Franklin Templeton’s licensed VATP partners in Hong Kong, and listed the Franklin OnChain U.S. Government Money Fund (grBENJI) in its platform’s RWA section for subscription by Professional Investors. What such announcements demonstrate is that licensed platforms can become local distribution and trading nodes for global tokenised funds. They are not a promise of future returns, nor do they preclude other licensed platforms from subsequently connecting the same product.

When reading about any tokenised MMF, copy these five lines into your memo — issuer, share class, reference annualised range, subscription frequency and “PI only” — before deciding whether to continue into the roadshow materials.

Risk: low volatility is not zero risk 

• Under rising interest rates or liquidity pressure, the fund may apply redemption gates or experience deviations
• Secondary market discounts can be larger than the “money market” volatility you expect
• Smart contracts, chain selection and platform withdrawals are additional operational risks
• USD products carry a currency factor for HKD investors

FAQ 

Q: Is the NAV always 1? 

A: That is the fund’s objective, not a guarantee. Very short-dated government money market funds have historically rarely “broken the buck”, but legally they remain investment products.

Q: Why does the app sometimes show a price that is not 1.00? 

A: What you may be seeing is a secondary market traded price, or a unit value that includes accrued income. Refer to the product documents and the iNAV explanation.

Q: Will income automatically go into my wallet? 

A: Most arrangements automatically reinvest income into additional units rather than paying out stablecoins every day. See the “distribution policy” section.

Q: Can retail clients buy it? 

A: It depends on whether the share class is authorised by the SFC and permitted for retail investors, and on the platform’s licence conditions. Do not map the US or Singapore sales scope onto Hong Kong.

Disclaimer 

This article is an explanation of how the product mechanism works. It does not constitute an offer, recommendation or guarantee of returns in respect of any fund (including grBENJI or similar products). Past performance or reference annualised figures do not represent future performance. For eligible investors only.