A tokenized money market fund is a registered money market fund whose shares are recorded as onchain tokens. The fund itself still runs under Rule 2a-7, which caps the maturity, credit and liquidity profile of everything it holds. Tokenization changes how the share is held and moved. It does not relax a single one of those portfolio constraints, and it does not add a basis point of yield.
The 2a-7 regime is the product. A tokenized share class inherits maturity ceilings, daily and weekly liquidity floors and a fund board, and any design that treats the token as the interesting part has the stack upside down.
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Rule 2a-7 is what makes it a money market fund
A registered money market fund operates inside a specific portfolio regime. Eligible securities carry 397 days or less of remaining maturity. Weighted average maturity stays at or below 60 days and weighted average life at or below 120 days. Since the 2023 amendments, daily liquid assets must be at least 25% of total assets and weekly liquid assets at least 50%.1
Those are not risk preferences. They are the definition. A fund that drifts outside them stops being a money market fund, whatever it is called and whatever chain its shares sit on. When a founder asks what a tokenized money market fund is, the useful answer is this list, because the list is the entire reason the instrument behaves the way it does.
How this differs from a tokenized Treasury wrapper
Tokenized treasuries covers the broader category: onchain claims on US government debt, often issued through a private fund or a special purpose vehicle under an exemption, holding bills directly. A tokenized money market fund is a narrower thing. It is a registered fund carrying the 2a-7 regime, a board, a prospectus, diversification and credit quality limits, and daily and weekly liquidity floors that get measured whether or not anyone is redeeming.
The practical difference shows up under stress rather than in the marketing. Two products can both hold short government paper and yield within a few basis points of each other. One has a codified liquidity floor and a supervised board deciding what happens when it is breached. The other has whatever its offering documents say. Diligence on this category means reading which of the two you actually bought.
The 2023 reforms swapped gates for fees
This is the change that matters most to anyone designing on top of a money market fund and it is the one least reflected in current documentation. The 2023 amendments raised the daily and weekly liquidity minimums to 25% and 50%, introduced mandatory liquidity fees for institutional prime and tax exempt funds in place of discretionary tools, and removed discretionary redemption gates from Rule 2a-7 entirely.2
So the default stress response is now a price, not a door. A redeeming holder pays a fee that pushes the cost of their liquidity onto them rather than onto whoever stayed. The board's separate power to suspend redemptions so an orderly liquidation can proceed still exists as a distinct rule, but it is a wind down tool, not a routine brake. A tokenized share class that hardcodes a gate assumption is modelling a regime that was retired.
Stable NAV is a rounding convention, not a peg
A constant dollar money market share is not backed by an arbitrage mechanism the way a pegged token is. It holds near one dollar because the portfolio constraints keep interest rate and credit sensitivity small enough that the per share value rounds to a dollar, and because NAV is computed daily on current market value or fair value where no quotation is readily available.4
That distinction has teeth in a token context. Depeg vocabulary imported from stablecoin design does not describe what happens here. There is no creation and redemption spread holding a level, no arbitrageur enforcing a band. There is a portfolio whose value moves a little and a valuation convention that usually absorbs it. When it stops absorbing it, the share breaks its dollar and there is no mechanism standing behind it, because there never was one.
The token trades continuously. The fund does not.
Primary market orders in a registered fund execute at the net asset value next computed after receipt, and NAV is computed on business days at a time the board sets.3 The secondary market for a token has no such schedule. That mismatch is the defining engineering problem of this instrument, and it does not go away by making the chain faster.
Two consequences to design around. First, any weekend or holiday price is a secondary market price against a stale reference, so the offering documents should say so plainly rather than implying continuous NAV. Second, liquidity thresholds are measured on the fund's calendar while redemption demand arrives on the token's calendar. A Saturday surge in secondary selling does not move a single daily liquid asset until Monday. Size the buffer against that gap, not against an average day.
What to settle before wrapping a share class
Four items, all of them off chain. Whether the token is the official record of ownership or a mirror of a transfer agent register, because that decides what a holder owns when the two disagree. How the mandatory liquidity fee, if the fund is subject to one, is applied to a redemption that arrives as a burn instruction. What the token does on days the fund does not strike NAV. And who holds the suspension power, under what named trigger.
The yield in this product comes from short dated instruments paying what they pay. The token changes the settlement rail and the holder set. Any design that needs a token layer incentive to look attractive is telling you the fund underneath is not carrying its weight. Whether a specific tokenized share class satisfies a specific regulation is a question for the fund's counsel and its board, not something a design document can settle.
Common questions
What is a tokenized money market fund?
It is a registered money market fund whose shares are recorded and transferred as onchain tokens. The fund still operates under Rule 2a-7, which caps eligible security maturity at 397 days, weighted average maturity at 60 days and weighted average life at 120 days, and requires daily liquid assets of at least 25% and weekly liquid assets of at least 50%.1 Tokenization affects the share record, not the portfolio.
How is a tokenized money market fund different from a tokenized Treasury?
A tokenized Treasury product is often a private fund or special purpose vehicle holding government paper under an exemption. A tokenized money market fund is a registered fund carrying the full 2a-7 regime: diversification and credit limits, codified daily and weekly liquidity floors, a board and a prospectus.1 Both can hold similar assets. Only one has a supervised rulebook for what happens under stress.
Can a money market fund still gate redemptions?
The 2023 amendments removed discretionary redemption gates from Rule 2a-7 and replaced them with mandatory liquidity fees for institutional prime and tax exempt funds.2 A separate rule still lets a board suspend redemptions so an orderly liquidation can proceed, but that is a wind down tool rather than a routine stress brake. Designs that assume a discretionary gate are modelling a regime that no longer applies.
Does a tokenized money market fund have a peg?
No. A constant dollar share holds near a dollar because the portfolio constraints keep its value stable enough to round there, and because NAV is computed daily on current market value or fair value.4 There is no arbitrage mechanism enforcing the level and no band around it. Stablecoin depeg vocabulary describes a different mechanism and does not transfer to this instrument.
See RWA Tokenomics Design for how this applies in practice.
Sources
- 17 CFR 270.2a-7, Money market funds
Electronic Code of Federal Regulations, current
The operative regime: eligible security maturity limits, weighted average maturity and weighted average life ceilings, and the daily and weekly liquid asset minimums as amended in 2023. - Money Market Fund Reforms; Form PF Reporting Requirements, Release Nos. 33-11211; 34-97876; IA-6344
U.S. Securities and Exchange Commission, 2023
Final rule raising daily and weekly liquidity minimums to 25% and 50%, introducing mandatory liquidity fees for institutional prime and tax exempt funds, and removing discretionary redemption gates from Rule 2a-7. - 17 CFR 270.22c-1, Pricing of redeemable securities for distribution, redemption and repurchase
Cornell Law School Legal Information Institute, current
Forward pricing and the requirement that NAV be computed at least once daily on business days at a time the board sets. - Mutual Fund Share Pricing: Frequently Asked Questions
Investment Company Institute, current
Daily NAV computation on current market value, with fair value where no market quotation is readily available.
Last reviewed 2026-08
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