Regulatory Uncertainty Aggravates Barriers to Institutional Adoption of Tokenized Money Market Funds

This, according to Alex Ryvkin, Rho Labs' founder, remains a far cry for institutional players due to the regulatory uncertainty involved. This is part of what keeps broader interest in tokenized financial products at bay.

"Tokenised money market funds are at risk of regulatory action at all times which doesn't exactly raise investor enthusiasm," Ryvkin said in an interview to [The Block](https://cryptotelegraphs.com). As a person who has been deeply involved in blockchain-compatible infrastructure, Ryvkin realized that readiness for RWA tokenization would come sooner or later, but the mass adoption is still far away.

Phase: RWA Adoption and Experimentation

Ryvkin pointed out that, although the awareness and interest of people on tokenized assets is indeed growing these days, adoption remains effectively light-years behind what is seen in legacy finance. "We're certainly in a phase of experimentation now, and tokenized MMFs are still largely available to just institutional or qualified investors, he said.".

Some recent efforts include institutions testing the ability to use tokenized assets, like BlackRock's BUIDL token, as collateral on crypto derivatives exchanges like Deribit. "This is promising for BlackRock and the wider market," Ryvkin said, emphasizing the point that crypto-liquidity backed by traditional securities will support a sustainable trading ecosystem when the infrastructure is built up.

Steps towards Mass Adoption:

Nevertheless, the complete assimilation of tokenized MMFs waits for further development on both sides of regulatory clarity and infrastructure development. He especially became clear with “[we] need to let institutional investors . safely hold tokenized assets with reputed custodians , against a robust legal framework and regulatory certainty”.

How does BUIDL Fund do it? Live in the Tokenized MMFs World

Tokenization with MMFs is again represented by BlackRock’s BUIDL fund launched in March 2024 , specifically a tokenized MMFs. BlackRock USD Institutional Digital Liquidity Fund (BUIDL) invests into the following liquid assets: U.S. Treasury bills and repurchase agreements, offering token holders monthly dividends. As the ERC-20 token is on the Ethereum blockchain, it ensures that all trades are possible only among the approved addresses on the whitelist from Securitize Markets, incorporating KYC and AML-compliant mechanisms.

Since its inception, the BUIDL fund has paid out well over $7 million in dividends and now commands assets summing up to over $500 million, making it one of the largest tokenized funds to date. Bank of New York Mellon is custodian of the fund; hence, this further adds to the security and legality surrounding its activities.

This is an information-article, not an investment advisory. Before making any investments or investment decisions, do your own research very carefully.

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