A recent analysis from JPMorgan revealed that tokenized funds currently represent only 5% of the stablecoin market, despite offering higher yields. The bank attributes stablecoins’ dominance to their deep integration into centralized exchanges, DeFi protocols, and cross-border payment systems, where they serve as the default cash instrument. In contrast, tokenized funds require additional subscription and redemption steps, making them less suitable for high-frequency on-chain activities.
JPMorgan’s report, published on May 21, highlights that while a streamlined SEC process has been introduced this year to simplify on-chain money market fund issuance, these changes are considered marginal and unlikely to overcome the structural liquidity advantage held by stablecoins. The bank expects tokenized funds to grow faster than stablecoins but sees a ceiling of 10-15% without meaningful regulatory reform.
Investors are increasingly looking to modernize liquidity management without altering the fundamentals of what they own, according to John Donohue, Head of Global Liquidity at J.P. Morgan Asset Management. The stablecoin market is currently valued at roughly $240 billion, meaning a 10% tokenized fund share would represent $24 billion in assets. JPMorgan’s own data suggests that the stablecoin moat runs deeper than the yield gap implies, and tokenization is expected to reshape the funds industry, but not at the expense of stablecoins’ established utility.