JPMorgan Chase & Co. is officially participating in the on-chain cash contest, and the prize is more than just a new product line. There are currently billions of dollars of institutional capital sitting in zero-yield stablecoins and early tokenization funds.
On December 15th, the $4 trillion banking giant launched My OnChain Net Yield Fund (MONY) on the Ethereum blockchain in an attempt to bring liquidity back to an internally managed and regulator-approved structure.
MONY wraps a traditional money market fund in a token that can run on public rails, combining the speed of cryptocurrencies with the yield of stablecoins like Tether and Circle, a payment feature that cannot legally be provided under new U.S. rules.
As such, MONY is less of a DeFi experiment and more of an attempt by JPMorgan to redefine what “cash on chain” means for large pools of KYCed capital.
The bank will also face more direct competition from BlackRock’s BUIDL and the broader tokenized U.S. Treasury sector, which has grown into a mid-tens of billions of dollars market as financial institutions seek higher-yielding blockchain-native cash equivalents.
How GENIUS tilts the field
To understand the timing, we need to start with the GENIUS Act, the US stablecoin law passed earlier this year.
This law created a full licensing regime for payment stablecoins and, importantly, prohibited issuers from paying interest to token holders simply for holding their tokens.
As a result, the core business model for regulated dollar stablecoins is now codified, with issuers holding reserves in safe assets, collecting yield, and not passing it on directly.
For corporate treasurers and crypto funds holding large stablecoin balances for weeks or months, this has a structural opportunity cost. In a world where front-end interest rates hover in the mid-single digits, that “stablecoin tax” could be around 4-5% per year on idle balances.
MONY is designed to sit outside of that boundary. It is structured as a Regulation 506(c) private money market fund rather than a payments stablecoin.
This means they will be treated as securities, sold only to accredited investors, and invested in U.S. Treasuries and fully collateralized Treasury repos.
As a money fund, it is structured to return most of its underlying income to shareholders after fees, rather than locking up the entire yield at the issuer level.
Cryptocurrency research firm Asva Capital pointed out the following:
“Tokenized money market funds solve the important problem of idle stablecoins with zero yield.”
By allowing eligible investors to subscribe and redeem in cash or USDC through JPMorgan’s Morgan Money platform, MONY effectively creates a two-step workflow.
This allows investors to use USDC or other payment tokens for transactions and switch to MONY when their priorities shift to holdings and profits.
For JPMorgan, this isn’t a side bet. The bank has seeded MONY with approximately $100 million in equity capital and is marketing it directly to its global liquidity customer base.
As John Donahue, head of global liquidity at JPMorgan Asset Management, says, the company expects other global systemically important banks to follow suit.
So the message is that tokenization is moving beyond the pilot. It is now the delivery mechanism for core cash products.
collateral contest
When we focus on collateral rather than wallets, the economic logic becomes clearer.
Crypto derivatives markets, prime brokerage platforms, and OTC desks require 24-hour margin and collateral.
Historically, stablecoins like USDT and USDC have been the default because they are fast and widely accepted. However, capital efficiency is not good in a high interest rate system.
Tokenized money funds are built to fill that gap. Instead of storing $100 million in a stablecoin that earns no returns, a fund or trading desk could hold $100 million in MMF tokens that track a conservative portfolio of short-term government assets and move between vetted venues at blockchain speed.
BlackRock’s BUIDL product is already showing how that will evolve. Once it became accepted as collateral on the institutional rails of major exchanges, it ceased to be “tokenized as a demo” and became part of the capital stack.
MONY aims at the same hallway, but with different surroundings.
While BUIDL is aggressively moving into crypto-native platforms through partnerships with tokenization experts, JPMorgan is tightly tying MONY to its Kinexys digital asset stack and existing Morgan Money distribution network.
In other words, MONY’s marketing target is not offshore high-frequency trading. This includes pensions, insurance companies, asset managers, and corporations that already use money market funds and JPMorgan’s liquidity platform.
Donahue argued that tokenization could “fundamentally change the speed and efficiency of transactions.” In practical terms, this means shrinking the settlement window for collateral movements from T+1 to intraday, and doing so without leaving the confines of bank or fund regulation.
Furthermore, the risk of stablecoins is not that they will disappear. That is, a meaningful portion of large institutional balances currently held in USDC or USDT for collateral and treasury purposes will instead migrate to tokenized MMFs, and stablecoins will become more focused on payments and open DeFi.
ethereum signal
Perhaps the clearest signal in MONY’s design is its choice of Ethereum as its base chain.
JPMorgan has been operating a private ledger and permissioned network for years. Placing a flagship cash product on a public blockchain means acknowledging that liquidity, tools, and trading partners are all concentrated there.
BitMine’s Thomas Lee sees this move as a turning point, stating simply, “Ethereum is the future of finance.” This claim is now supported by the fact that the world’s largest banks are deploying their flagship tokenized cash products on the network.
However, the launch of a “public” blockchain here comes with an asterisk. MONY is still a 506(c) security.
This means that the token is whitelisted and stored only in identity-verified wallets, and transfers are managed according to securities laws and the fund’s own restrictions. This effectively splits the on-chain dollar product into two overlapping layers.
In the permissionless tier, retail users, high-frequency traders, and DeFi protocols will continue to rely on Tether, USDC, and similar tokens. Their value propositions are censorship resistance, universal composability, and ubiquity across protocols and chains.
At the permission layer, peer funds such as MONY and BUIDL, as well as tokenized MMFs from Goldmans and BNY Mellon, offer regulated, high-yield cash equivalents to institutions that value audit trails, governance, and counterparty risk over permissionless composability. Their liquidity is thinner, but they are more selective. Their use case is narrower, but the value per dollar is higher.
Considering this, JPMorgan is betting that the next wave of meaningful on-chain volume will come from the second group: treasurers who want the speed and integration of Ethereum without taking on the regulatory ambiguity that still surrounds much of DeFi.
axis of defense
In the end, MONY appears to be more of a lynchpin of its internal defenses than a revolution against the existing system.
For a decade, fintech and crypto companies have been chipping away at banks’ payments, currency exchange and custody businesses. Stablecoins then went after the most basic layer of deposits and cash management, offering alternatives like digital bearers that fit entirely outside banks’ balance sheets.
By launching a tokenized money market fund on public rail, JPMorgan is trying to pull some of that money movement back within its own boundaries, even if it means cannibalizing some of its traditional deposit base.
JPMorgan Asset Management CEO George Gatti emphasized “active management and innovation” as the core of the service, implicitly contrasting it with stablecoin issuers’ passive float-skimming models.
On the other hand, it’s not just banks. BlackRock, Goldman Sachs, and BNY Mellon have already moved to tokenized MMFs and tokenized cash equivalents.
In other words, JPMorgan’s entry will shift the trend from early experimentation to open competition among incumbents over who owns institutional investors’ “digital dollars” on public chains.
Even if that competition is successful, its impact will not be the end of stablecoins or a victory for DeFi.
Instead, it will be a quiet rebundling, as the payments rail will be made public and the products running on it will look a lot like traditional money market funds.
But the financial institutions profiting from the world’s cash will once again be the same Wall Street names that dominated the pre-tokenization era.