Why Tokenization Starts with Money Market Funds — and What Firms Need to Get Right

Cynthia Kelly, Managing Director of Compliance, STP Investment Services | Featured in FundFire | March 25, 2026

 

Invesco’s $967 million acquisition of Superstate’s tokenized U.S. Treasury fund marks a significant milestone in the institutionalization of tokenized assets — and is the latest signal that major asset managers are moving from exploration to execution in the tokenization space. FundFire spoke with Cynthia Kelly, Managing Director of Compliance at STP Investment Services, about why money market funds have become the proving ground for tokenization, what operational considerations firms need to address, and what it means for the broader market.

 

Why Tokenization Is Easier to Apply to Money Market Funds

Cynthia explained the structural reason money market funds have become the entry point for tokenization efforts across the industry:

“Tokenization has been easier to apply to money market funds because the underlying assets are already highly standardized, liquid and priced on a consistent basis. That makes it much simpler to represent those interests digitally without introducing additional complexity around valuation, transferability, or investor rights.”

This is why BlackRock, J.P. Morgan, Franklin Templeton, and now Invesco have all started their tokenization strategies with money market and short-duration Treasury vehicles. The asset class removes variables — it’s a controlled environment to test infrastructure before introducing the complexities of less liquid or bespoke assets.

 

The “Test and Learn” Phase — and What Comes After

Most firms currently exploring tokenization are still in an early phase, Cynthia noted, and that’s by design. U.S. Treasuries offer a low-risk proving ground for working through the operational and regulatory considerations that tokenization introduces. As she told FundFire:

“The tokenization of U.S. Treasuries reflects a measured effort to modernize market infrastructure within existing regulatory frameworks. By focusing on highly liquid, low-risk instruments, firms are creating a more controlled environment to evaluate key considerations such as custody, valuation, recordkeeping, and settlement processes in a digital format.”

The four operational considerations Cynthia identifies — custody, valuation, recordkeeping, and settlement — are not trivial. Each requires firms to determine how existing workflows and controls map onto a blockchain-based environment, and where new processes or oversight frameworks need to be built.

 

The Move Toward Private Markets Tokenization

Money market funds are the starting point, not the destination. Cynthia flagged that managers are also beginning to tokenize private market funds — a significantly more complex undertaking given the illiquid and bespoke nature of those assets. The operational and compliance challenges in private markets tokenization are considerably greater than in money markets, and firms that have worked through the infrastructure questions on Treasury funds will be better positioned to tackle them.

 

About Cynthia Kelly

Cynthia Kelly is Managing Director of Compliance at STP Investment Services, where she advises registered investment advisers and alternative asset managers on regulatory compliance, emerging technology considerations, and operational readiness. STP provides compliance, fund administration, and investment operations services to RIAs and alternative asset managers.

 

Read the full article in FundFire (subscription required).