JP Morgan Chase & Co. has formally entered the chain cash competition, and the prize is not just a new product line. It’s the billions of dollars of institutional capital now sitting in zero-yield stablecoins and early tokenized funds.
On December 15, the banking giant launched a $4 trillion valuation launched the My OnChain Net Yield Fund (MONY) on the Ethereum blockchain, in its attempt to withdraw liquidity into a structure that controls it and that regulators recognize.
MONY wraps a traditional money market fund into a token that can live on public rails, combining the speed of crypto with the one feature that stablecoins like Tether and Circle legally cannot provide under new US rules: yield.
That makes MONY less of a DeFi experiment than JP Morgan’s attempt to redefine what “cash on-chain” means for large, KYC capital pools.
It also puts the bank in more direct competition with BlackRock’s BUIDL and the broader tokenized Treasuries sector, which has grown into a mid-tens of billions market as institutions look for yield-bearing, blockchain-native cash equivalents.
How GENIUS tilts the field
To understand the timing, start with the GENIUS Act, the US stablecoin law passed earlier this year.
The statute created a full licensing regime for the payment of stablecoins and, crucially, prohibited issuers from paying interest to token holders just for holding the token.
As a result, the core business model for regulated dollar stablecoins is now codified: issuers hold reserves in safe assets, collect the proceeds, and pass none of it on directly.
For corporate treasurers and crypto funds that maintain large stablecoin balances for weeks or months, this entails structural opportunity costs. In a world where front-end rates hover in the mid-single digits, that “stablecoin tax” could amount to about 4-5% per year on inactive balances.
MONY is designed to sit outside that perimeter. It is structured as a Rule 506(c) private placement money market fund, and not as a payments stablecoin.
This means it is treated like a security, sold only to accredited investors, and invested in US Treasury bonds and fully covered government bonds.
As a cash fund, it is structured to return the majority of underlying income, net of fees, to shareholders, rather than retaining full returns at issuer level.
Crypto research firm Asva Capital noted:
“Tokenized money market funds solve a major problem: inactive stablecoins that do not produce returns.”
By allowing qualified investors to sign up and redeem into cash or USDC through JP Morgan’s Morgan Money platform, MONY effectively creates a two-step workflow.
This allows investors to use USDC or other payment tokens for transactions and then convert to MONY when the priority shifts to holding and earning.
For JP Morgan, this is not a side bet. The bank has provided MONY with approximately $100 million of equity capital and is marketing it directly to its global liquidity customer base.
As John Donohue, head of Global Liquidity at JP Morgan Asset Management, put it, the firm expects other global systemically important banks to follow suit.
So the message is that tokenization has progressed beyond pilots; it is now a delivery mechanism for core money products.
The collateral match
The economic logic becomes clearer when you look at collateral, not portfolios.
Crypto derivatives markets, prime brokerage platforms and OTC desks require margin and collateral 24 hours a day.
Historically, stablecoins such as USDT and USDC have been the standard because they have gained rapid and widespread adoption. However, in a high interest rate regime they are not capital efficient.
Tokenized money funds were built to fill that void. Instead of parking $100 million in stablecoins that yield nothing, a fund or trading desk can hold $100 million in MMF tokens that track a conservative portfolio of short-term government assets and still move between controlled locations at blockchain speed.
BlackRock’s BUIDL product has already shown how this can evolve. Once it was accepted as collateral on the institutional rails of major exchanges, it ceased to be “tokenization as demo” and became part of the funding stack.
MONY is focused on the same corridor, but with a different perimeter.
While BUIDL has aggressively entered crypto-native platforms through partnerships with tokenization specialists, JP Morgan is closely linking MONY to its own Kinexys Digital Assets stack and the existing Morgan Money distribution network.
So the pitch for MONY is not aimed at the offshore, high-frequency trading world. This concerns pensions, insurers, asset managers and companies that already use money market funds and JP Morgan’s liquidity platforms.
Donohue has argued that tokenization “could fundamentally change the speed and efficiency of transactions.” In practical terms, this means reducing the settlement windows for the shift of collateral from T+1 to intraday, without leaving the confines of banking and fund regulation.
Moreover, the risk for stablecoins is not that they will disappear. It is that a meaningful portion of the large, institutional balances currently sitting in USDC or USDT for collateral and treasury purposes are instead migrating to tokenized MMFs, leaving stablecoins more concentrated in payments and open DeFi.
The Ethereum signal
Perhaps the clearest signal in MONY’s design is the choice of Ethereum as the base chain.
JP Morgan has been managing private books and authorized networks for years; Placing a flagship cash product on a public blockchain is an acknowledgment that liquidity, tooling and counterparties have converged there.
BitMine’s Thomas Lee sees the move as a turning point, to report simply that “Ethereum is the future of finance.” This claim is now backed up by the fact that the world’s largest bank is deploying its flagship tokenized cash product on the network.
However, the ‘public’ blockchain launch here comes with an asterisk. MONY is still a 506(c) security.
This means that the tokens can only be held in eligible, KYC wallets, and transfers are monitored to comply with securities laws and the fund’s own restrictions. That effectively splits the dollar instruments in the chain into two overlapping layers.
At the permissionless layer, retail users, high-frequency traders, and DeFi protocols will continue to rely on Tether, USDC, and similar tokens. Their value proposition is resistance to censorship, universal composability, and ubiquity in protocols and chains.
At the permissioned layer, MONY and peer funds like BUIDL and Goldman’s and BNY Mellon’s tokenized MMFs provide regulated, yield-bearing cash equivalents to institutions that care more about audit trails, governance, and counterparty risk than permissionless composability. Their liquidity is thinner but better composed; their use cases are narrower, but with higher value per dollar.
Considering this, JP Morgan is betting that the next meaningful wave of on-chain volume will come from that second group: treasurers who want the speed and integration of Ethereum, without addressing the regulatory ambiguity that still surrounds much of DeFi.
A defensive turn
Ultimately, MONY looks less like a revolution against the existing system and more like a defensive pivot within it.
For a decade, fintech and crypto companies have undermined banks’ payments, FX and custody businesses. Stablecoins then looked at the most fundamental layer: deposits and cash management, and offered a digital, bearer-like alternative that could be completely off banks’ balance sheets.
By launching a tokenized money market fund on the public rails, JP Morgan is trying to pull some of that migration back within its own perimeter, even if it means cannibalizing parts of its traditional deposit base.
George Gatch, CEO of JP Morgan Asset Management, has emphasized “active management and innovation” as the core of the offering, implicitly contrasting this with the passive float-skimming model of stablecoin issuers.
In the meantime, the bank is not alone. BlackRock, Goldman Sachs and BNY Mellon have already moved to tokenized money market funds and tokenized cash equivalent products.
The entry of JP Morgan thus shifts that trend from early experimentation to open competition among incumbents over who will own the institutional “digital dollars” of public chains.
If that competition succeeds, the effect will not be the end of stablecoins or the triumph of DeFi.
Instead, it would be a silent rebundling, because the settlement rails will be public and the instruments running on them will look a lot like traditional money market funds.
However, the institutions that earn a spread on the world’s money will once again be the same Wall Street names that dominated the pre-tokenization era.
