"Tokenization of funds" is gaining popularity overseas. What has Wall Street seen?

Author: Dong Jing, Wall Street Journal

The global fund tokenization market is experiencing explosive growth, with Wall Street giants entering this emerging field.

According to Goldman Sachs' latest report, the market size of tokenized asset management reached $23 billion in the first half of this year, an increase of 260% compared to January. The total market value of the tokenized government bond market has even reached $7.5 billion.

Goldman Sachs expects that by the 2030s, tokenized funds will account for 1% of the global asset management market, exceeding $600 billion. This is not just limited to traditional money market funds; the tokenization of alternative assets such as private equity is also rapidly advancing.

Goldman Sachs believes that this astonishing growth reflects a significant increase in institutional investors' recognition of the application of blockchain technology in the traditional financial sector.

The report pointed out that Goldman Sachs recently partnered with BNY Mellon to launch the first tokenized money market fund solution in the United States, marking the official arrival of this innovative financial instrument in the U.S. market. Notable institutions such as BlackRock, Fidelity Investments, and Goldman Sachs Asset Management participated in the initial release.

Goldman Sachs believes that the rapid development of global fund tokenization is attributed to the increasingly完善 global regulatory environment and the growing demand from institutional investors for enhanced liquidity and reduced costs.

Money Market Funds Become Pioneers of Tokenization

Tokenized money market funds are becoming the vanguard of this wave of innovation. According to a Goldman Sachs report, there are currently over 335 types of tokenized physical asset products operating on the blockchain, with money market funds occupying an important position.

BlackRock's BUIDL Fund has launched in partnership with Securitize, with assets under management exceeding $2.9 billion, making it the largest tokenized money market fund in the world. Other significant participants include:

• Franklin Templeton's on-chain U.S. government money market fund has been trading on-chain since 2021, reaching a size of $512 million by early 2025.
• Fidelity recently applied to launch a dedicated tokenized money market fund, while Ondo Finance's OUSG product has a scale of approximately $253 million.
• The government money market digital fund of Wisdom Tree is expected to reach a scale of approximately $130 million by mid-2025.
• The tokenized treasury money market fund VBILL launched by the American asset management company VanEck can be used on multiple blockchain networks.
• State Street Bank has announced that it is developing a tokenization project for money market funds to be used as collateral, which will eliminate the need to liquidate money market fund positions to meet margin requirements.

Goldman Sachs analysts believe that the commercial participation of these heavyweight institutions indicates that the market's demand for blockchain-native liquidity is increasing.

Follow-up on Alternative Assets such as Private Equity

Private equity and alternative asset tokenization are also gaining attention.

According to Goldman Sachs' forecast, the tokenized fund market is expected to expand significantly from $40 billion in 2023 to $317 billion in 2028, with growth primarily concentrated in private equity, private debt, real estate, and other alternative strategies.

According to a PwC survey, 54% of institutional investors have listed private equity as their preferred tokenized alternative investment.

Apollo's diversified credit fund and other tokenized private credit strategies offer qualified institutions partial investment opportunities within a compliant framework.

Investors can obtain ACRED tokens, which represent their on-chain equity in the Apollo traditional credit fund. One of the key features is the ability to mint the derivative token sACRED, which transforms investments into flexible collateral for borrowing stablecoins on decentralized finance platforms.

It is estimated that tokenized alternative investments could drive up to $400 billion in distribution opportunities, simplifying, automating, and streamlining the investment cycle supported by tokenization, including automation of capital calls, portfolio customization, and access to these typically illiquid instruments.

U.S. Tokenized Money Market Funds Reach a Milestone

The collaboration between Goldman Sachs and Bank of New York Mellon marks a significant milestone moment for the tokenized currency market fund in the United States.

This solution allows U.S. fund management companies for the first time to subscribe to money market fund shares through the LiquidityDirect platform of BNY Mellon, utilizing Goldman Sachs' blockchain-based GS DAP platform.

The LiquidityDirect platform of Bank of New York Mellon serves as a tokenization manager, facilitating the subscription and redemption of money market funds, as well as the on-chain minting and burning of tokens. The tokens represent mirrored records of off-chain security interests and may directly represent the security interests themselves in future phases.

Goldman Sachs liquidity solutions partner Shaun Cullinan stated that the biggest initial opportunity lies in collateral management. Traditional mutual funds have limitations in ownership record keeping and cannot effectively serve as collateral in the ecosystem. The future potential of tokenized funds can alleviate these frictions and unlock value in asset classes.

Amar Amlani, head of digital assets for Goldman Sachs Americas, pointed out that periods of market volatility often come with significant fluctuations in margin calls, which usually need to be met with cash. This often leads to redemptions from money market funds, exacerbating pressure on the underlying assets. Mobilizing money market funds on a T+0 basis and expanding their use in collateral liquidity is expected to bring benefits from a financial stability perspective.

The regulatory environment is gradually becoming clear

Goldman Sachs stated that global regulators generally take a positive attitude towards fund tokenization, creating favorable conditions for market development.

In April 2025, the Hong Kong Securities and Futures Commission approved the world's first tokenized money market ETF, further broadening potential liquidity gains and demonstrating a strong interest in interoperable token formats.

The fund tokenization implementation blueprint released by the UK in 2023 provides a phased approach aimed at enhancing the efficiency and transparency of the investment market.

The Financial Conduct Authority of the UK has consistently supported industry efforts and recognized the potential of fund tokenization. The agency plans to consult on guidance in the third quarter of 2025 to support the blueprint for tokenization.

In the United States, although the SEC has not yet released a regulatory framework specifically for tokenized funds, the regulatory signals are increasingly positive.

Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), publicly advocates for tokenization, pointing out that it can enhance capital formation and enable more efficient use of collateral.

Major industry players in the United States have launched tokenized fund products, demonstrating the commercial momentum in this field.