Tokenized money market funds and stablecoin reserve rules

On August 3, 2026, BlackRock launched two tokenized money market funds (BSTBL and BRSRV). A money market fund invests in short-maturity assets such as short-term government bonds. Tokenization means issuing shares of the fund as tokens on a blockchain. BSTBL adds a new class of token shares on Ethereum to an existing fund. BRSRV is a new fund created for use across multiple blockchains. According to the BlackRock press release, the funds invest in cash, short-term U.S. Treasuries and overnight repurchase agreements (repos) collateralized by Treasuries. The investment objective of both funds is to qualify as assets that issuers may hold as reserves under the GENIUS Act, the U.S. payment stablecoin law.

In an April analysis, the European Central Bank (ECB) wrote that tokenized money market funds had not, up to that point, been used as reserve assets for fiat-backed stablecoins. They had been used only in decentralized finance (DeFi) services or algorithmic stablecoins.

At least one-to-one and monthly disclosure: GENIUS Act reserve requirements

The GENIUS Act was enacted in July 2025. A permitted issuer must hold identifiable reserve assets backing its outstanding stablecoins at least one-to-one. Reserve assets are assets an issuer holds in preparation for redemptions. The list includes cash, demand deposits, Treasuries with a maturity of 93 days or less and overnight repos, along with shares of registered government money market funds that invest only in such assets. Cash, deposits, Treasuries and money market fund shares may also be held in token form, provided that applicable laws and regulations are followed.

Disclosure obligations are also set out in the law. Each month, an issuer must publish on its website the total number of its outstanding stablecoins and the amount and composition of its reserve assets, along with the average maturity and geographic location of custody for each asset type. This information is examined monthly by a registered public accounting firm. The chief executive officer and chief financial officer certify its accuracy to the regulator each month. Knowingly false certification is subject to criminal penalties.

For redemption, the law requires issuers to publish their redemption policies and fees and to establish clear procedures for timely redemption. The text of the law sets no deadline, in days, for completing ordinary redemptions. Only regulators may limit timely redemption at their discretion. The law takes effect on the earlier of January 18, 2027 (18 months after enactment) and the date 120 days after final implementing regulations are issued.

Registers and blockchains: authoritative records that differ by fund

On its explainer page for UK investors, BlackRock treats the transfer agent's register of shareholders as the authoritative record. A transfer agent is the institution that handles transfers of ownership of fund shares and maintains the register of shareholders. The page describes the token as a digital representation that mirrors those shares on a blockchain. Tokens are issued on subscription, and tokens sent to a redemption address are burned and treated as redeemed. When tokens move, the official register is updated to match.

The BRSRV prospectus dated July 31 describes a different approach. Securitize, the transfer agent, keeps the official record of ownership on the public blockchains used by investors. An off-chain register linking wallet addresses to investor identity information, together with these blockchain records, makes up the fund's official register of shareholders. As long as neither system has a technical failure, these records establish ownership.

The ECB took the view that when all core processes run on a blockchain, the distributed ledger becomes the legal record and the ultimate basis of ownership. However, about half of the funds in its sample still use conventional records as the primary record of ownership. In those cases, shares pass legally only after those records are reconciled with the distributed ledger (that is, after the two sets of records are matched). The ECB also wrote that a structure in which multiple intermediaries manage parallel infrastructure on and off the blockchain is likely to increase operational risk.

In Korea, the amendments enabling tokenized securities, passed by the National Assembly in January 2026, specify that a distributed ledger may be used as a securities account register.

If the authoritative record differs from fund to fund, the record from which an issuer takes the reserve figures for its monthly disclosure may also differ by fund.

A 5:00 p.m. cutoff and a proposed two-business-day limit: two redemption timetables

According to the BRSRV prospectus, redemptions take place on business days when the New York Stock Exchange and the Federal Reserve Bank of Philadelphia are open. Only requests received in good order by 5:00 p.m. U.S. Eastern Time are processed that day. A redemption request begins with moving tokens to the fund's redemption wallet. The timestamp of the block containing that transaction must be before the cutoff, and enough blocks must then be added to confirm the transaction before the request is accepted. Tokens moved after the cutoff or on a non-business day are redeemed on the next business day.

For requests received by the cutoff, the tokens are burned that day and payment is usually sent the same day. However, the fund reserves the right to pay within seven days of receiving a request when it judges that early payment would be detrimental to the fund. BlackRock's UK explainer likewise describes a structure in which tokens can be transferred 24 hours a day between approved investors, while redemptions follow the existing fund's cutoff time.

The timetable on the stablecoin side is in a proposed rule from the Office of the Comptroller of the Currency (OCC). Under the proposal, timely redemption may not exceed two business days following the date of the request. If redemption requests exceed 10% of outstanding issuance within a 24-hour period, the deadline is extended to seven calendar days. As its reason for choosing a 24-hour window, the OCC cited the possibility that redemption requests could surge outside business hours or at times when reserve assets cannot be sold.

The ECB identified this timing gap as a risk. Token shares may be redeemable immediately, 24 hours a day, while the underlying fund processes subscriptions and redemptions with a lag, according to set cutoff times. The ECB considered that this difference could create a liquidity mismatch (a state in which the token and the underlying fund can be converted to cash at different speeds). In its analysis, this mismatch raises the risk of large-scale redemptions and becomes more pronounced if the token market is shaken while the underlying market is closed.

Full legal rights and concentration limits: open questions in the proposed rules

On February 25, 2026, the OCC issued a proposed rule to implement the GENIUS Act and requested comments. The proposal left several points on reserve assets in token form as questions rather than settling them. First, it asked whether to define reserve assets in token form as digital assets that represent another asset and provide "full legal rights" to that asset. It also sought comment on a limit capping the share of token-form assets in total reserve assets at or below a certain percentage, giving 20% as an example. Finally, it asked whether to require disclosure of both where tokens are held on the ledger and where the underlying physical assets they represent are held.

On August 20, PYMNTS, a U.S. payments trade publication, reported that the OCC was aiming for a final rule in November. The report added the caveat that this date was not a fixed schedule. As far as could be confirmed as of the reference date, the OCC rule is at the proposal stage. The Federal Reserve Board also issued two proposed rules under the GENIUS Act on September 24, and the first proposal includes rules for companies that hold reserve assets in custody. The BlackRock press release also noted that because implementing standards have not been finalized, the funds may need to change their holdings or operating procedures if the rules change.

In Korea, the Financial Services Commission (FSC), the country's financial regulator, is in the final stage of coordinating a government draft of the Digital Asset Basic Act (working title), a bill under discussion to establish a framework for won-denominated stablecoins. On September 27, Business Post reported that preparation of the bill appears likely to miss the September deadline set by the government and the ruling party.

Mismatched records, concentrated redemptions, erroneous transfers

The law sets the framework for the list of reserve assets, disclosure and redemption procedures, and the OCC proposal puts forward redemption deadlines. As far as could be confirmed as of the reference date, the areas where standards remain unclear are exceptional situations.

First, when records do not match. The BRSRV prospectus states that network delays may cause the blockchain records and the transfer agent's off-chain backup records to diverge. If a delay is prolonged, the fund may process transactions manually using conventional records or accept requests through another network. It has not been determined which set of records an issuer's monthly disclosure and the accounting firm's examination should follow in the meantime.

Second, when redemptions are concentrated. Under the proposal, the stablecoin redemption deadline is two business days, or seven days if requests within 24 hours exceed 10%. BRSRV redemptions are tied to a 5:00 p.m. business-day cutoff and a seven-day payment right. A limit on the token-form share of reserve assets appears in the OCC proposal as a question for comment. How the two timetables are to be aligned has also not been determined.

Third, when erroneous transfers are corrected. According to the prospectus, the transfer agent may burn tokens that were transferred in error and issue new tokens to the correct wallet. The earlier records are not erased; the correcting transactions are added to the blockchain. The owner of a wallet that received tokens in error has no legal right to those shares. What remains open is how such corrections, and manual processing during failures, are to be recorded in issuer disclosures and regulatory reports, and who verifies them.

Standards for these three situations are for issuers, fund managers, transfer agents and regulators to set together. The same questions face Korea, where the framework for won-denominated stablecoins is still being coordinated.