- Tokenized funds market funds give crypto investors access to low-risk debt instruments
- Products such as Franklin Templeton’s FOBXX offer yield while stablecoins hold a foothold in the market
- Stablecoins and tokenized money funds may become interchangeable products in the future
Tokenized money funds, which are rapidly gaining popularity, are beginning to present serious competition to stablecoins. Unlike stablecoins, returns on money market funds flow directly to investors, making them an attractive option for those seeking low-risk investments with income from short-term debt instruments.
As interest in products like Franklin Templeton’s FOBXX fund grows, traditional stablecoins may face challenges in the future crypto industry.
Stablecoins or Tokenized Funds
Stablecoins like Circle’s Tether and USDC have dominated the market for years due to their one-to-one reserve backing, which has allowed them to grow to $171 billion. However, the issuers of these stablecoins generate revenue by investing their reserves in U.S. government treasuries.
For example, Tether earned $5.2 billion in 2024 from debt investments.
Tokenized money funds such as FOBXX offer investors access to short-term, low-risk debt securities with immediate income. The difference is that the income in this case does not go to the issuer, but is distributed to token holders.
Asset-Based Short-Term Returns
Franklin Templeton’s tokenized money market fund, known as FOBXX, offers holders a yield of 5.12% by investing in short-term U.S. debt securities.
The appeal of such products lies in their stability: the fund’s shares are always valued at $1, just like the stablecoins, but they generate income for holders, which combines the functions of the stablecoins while giving an additional one.
These tokens are available on blockchains such as Arbitrum, Avalanche, Polygon, and Stellar, but can only be accessed through specially designed Franklin Templeton apps.
Conclusion
Stablecoins have taken a very strong position in the crypto market, and now it is hard to imagine that someone can move them.
For example, Tether stood up even when it had huge lawsuits, and Circle’s products are legalized even in the EU.
However, if there is a product that can offer the same and even more, and if it does a good job on its reputation, why can’t this one stand a chance?
Let’s keep a close eye on a possible, unexpected competition.
