Morgan Stanley Targets BlackRock With Money Market Fund for Stablecoin Issuers

Morgan Stanley on Friday debuted a money market fund aimed at stablecoin issuers, positioning the product as a way for companies like Circle to manage their reserves.

The Stablecoin Reserves Portfolio (MSNXX), available on days when the New York Stock Exchange is open, will allow companies to invest the reserves backing their tokens, the investment bank with $9.3 trillion in assets said in a report. announcement.

While stablecoin issuers often back their tokens with a mix of cash and U.S. Treasury securities, Morgan Stanley indicated that MSNXX will also allocate to notes and bonds and certain overnight repurchase agreements backed by liquid assets.

The product is specifically designed to comply with the GENIUS Act, a federal framework for stablecoins that went into effect last year and imposes reserve requirements.

In a statement, Morgan Stanley Co-Head of Global Liquidity Fred McMullen noted the sector’s recent growth, particularly a “significant increase in the number of stablecoin issuers and the growing number of assets held in stablecoins.”

Whether through new use cases in traditional finance or payments through AI agents, stablecoins are expected to become a $2 trillion market by the end of 2028, or within about 32 months, according to a recent note from investment bank Standard Chartered.

On Friday, the value of all stablecoins was $316 billion Coin gecko. The second largest stablecoin issuer, Circle, currently holds most of its USDC reserves in the Circle Reserve Fund (USDXX), a money market fund managed by BlackRock.

Decentralized finance projects like Ethena, which offers a synthetic dollar called USDe, have taken a different path: using BlackRock’s tokenized money market fund, BUIDL. The product issued on nine blockchains was valued at $2.5 billion on Friday RWA.xyz.

To be fair, Morgan Stanley’s product will not be traded in the chain. However, Amy Oldenburg, head of the bank’s digital asset strategy, recently told Declutter that tokenized money market funds are “absolutely a step forward” for the Wall Street giant’s product roadmap.

Earlier this month, Morgan Stanley debuted a spot Bitcoin ETF, joining the company’s army of about 16,000 financial advisors. Since the product hit the market just over two weeks ago, it has generated $173 million in net inflows, according to figures Farside Investors.