Global Digital Finance (GDF), the industry association representing firms across digital assets, market infrastructure and tokenisation, has called for urgent US regulatory alignment to support tokenised money market funds, warning that legal uncertainty is now constraining collateral mobility across the financial system.
In a new report, the group says tokenised MMFs could materially reduce settlement frictions and unlock “trapped capital” for banks, brokers and clearing houses, but argues that progress will stall without clearer treatment under UCC Articles 8, 9 and 12.
GDF’s study models multiple settlement, margining and liquidity scenarios with major institutions and finds that digital‑native and digital‑twin fund structures offer the strongest operational benefits. The group says tokenised MMFs can support intraday liquidity, programmable collateral and cross‑venue settlement, positioning them as a core component of future market plumbing rather than an experimental digital‑asset product.
Amy Caruso, head of digital regulatory strategy at the International Swaps and Derivatives Association (ISDA), said tokenisation is already demonstrating practical value in derivatives markets. “Tokenisation can improve collateral mobility and reduce operational friction across derivatives markets,” she said, adding that industry adoption will depend on consistent legal frameworks and interoperable infrastructure.
The report highlights three tokenisation models — digital‑native, digital‑twin and custodial — and assesses their suitability for collateral use. Digital‑native structures, where fund shares are issued directly on distributed ledgers, delivered the strongest liquidity outcomes in GDF’s simulations. Digital‑twin models, which mirror traditional fund shares on‑chain, were found to be more compatible with existing custody and transfer‑agency processes.
GDF’s executive director Lawrence Wintermeyer said the US risks falling behind other jurisdictions unless it moves faster to clarify the legal status of tokenised assets.
“The US must move faster to provide legal certainty for tokenised assets if it wants to maintain leadership,” he said. Wintermeyer added that the industry is already preparing for wider adoption, with large institutions testing tokenised MMFs for intraday settlement and margin optimisation.
The report also outlines ten legal and regulatory dimensions that require alignment, including settlement finality, insolvency treatment, perfection of security interests and eligibility for initial and variation margin. GDF argues that resolving these issues would allow tokenised MMFs to operate as high‑quality liquid assets within existing risk frameworks.
Industry adoption is expected to accelerate through 2027 as firms seek operational efficiencies and faster collateral movement. GDF says tokenised MMFs could become a standard tool for liquidity management, provided regulators, fund managers and market infrastructure operators coordinate on standards and interoperability.
Here’s the full report.
