From real estate to bonds, the rise of tokenized real-world assets ( RWAs ) is fundamentally reshaping global finance. By converting ownership rights into digital tokens on a blockchain, this technology unlocks unprecedented operational efficiency, enhanced liquidity, and fractional ownership.

The scale of this shift is impressive. Data from InvestaX reveals that the RWA market has surged from just US$2.9 billion in 2022 to over US$30 billion today.

One focus area that is gaining traction is the tokenization of money market funds ( MMFs ) due to their ability to connect entities in traditional finance ( TradFi ) to the world of decentralized finance ( DeFi ).

“In tokenized money market funds, fund shares are converted into digital tokens using blockchain technology. This gives traditional investors direct, non-intermediated access to digital finance markets through products backed by familiar and safe assets,” Moody’s Ratings says in a recent report. “Digital finance investors, meanwhile, can use tokenized money market funds to optimize their liquidity in a format that is easy to use and, unlike most stablecoins, allows them to earn a yield.”

This compelling potential has led to several notable launches this year globally as financial players sought to capture the opportunity. In February 2025, China Asset Management ( Hong Kong ) unveiled its first tokenized fund, the ChinaAMC HKD Digital Money Market Fund, making it the first tokenized fund in the Asia-Pacific region. This was followed by launches from Franklin Templeton and, more recently, JPMorgan Chase, which rolled out its first tokenized MMF on Ethereum.

It is estimated that by 2029, assets under management ( AUM ) for tokenized funds could reach US$235 billion, according to data from global funds network Calastone. In 2024, tokenized funds had AUM of US$4 billion.

Areas of concern

With the development of more tokenized MMFs on the horizon, J.P. Morgan Asset Management ( JPMAM ), in a recent white paper, identified several challenges that need to be addressed, particularly around related infrastructure and regulation.

One area of concern is the lack of standardized approaches and infrastructure for compliance and identity verification, which prevents industry participants from securing the operational benefits that tokenization aims to provide. In an ideal scenario, participants should have a digital identity that they can use to verify their identities across multiple platforms and use cases.

The white paper also highlights the need to balance transparency and confidentiality. If information on the blockchain is transparent to the public, all participants can see all the transactions, and this raises the issue of alpha protection and the risk of triggering runs on funds. One solution is selective transparency, which may involve locking up specific trade amounts or allowing conditional disclosure to financial regulators or tax authorities only.

“Participants should have the choice to shield important details and protect sensitive financial information. Data would be conditionally disclosed on a unified ledger with a shared state, ensuring transparency without compromising confidentiality,” according to the JPMAM study.

Scalability of infrastructure should be addressed as well. Market participants need trusted partners to access public networks and manage their tokenized assets and private keys. “Fund managers need to have a solution for creating a tokenized fund that can be integrated with their transfer agent ( TA ) in a way that the TA can still perform its regulatory and administrative duties. In addition, fund managers must be able to control and maintain security of their tokenized fund systems on the public blockchain,” the white paper asserts.