JP Morgan Chase & Co. has officially entered the on-chain money-making contest, and the prize isn’t just a new product line. These are the billions of dollars of institutional capital that is now in zero-yielding stablecoins and early token funds.
On December 15, the $4 trillion banking giant launched the My OnChain Net Yield Fund (MONY) on the Ethereum blockchain, aiming to bring liquidity back into a structure that it controls and recognizes regulators.
MONY wraps a traditional money market fund in a token that can live on public rails, combining the speed of crypto with the one feature that payment stablecoins such as Tether and Circle cannot legally offer under new US rules: yield.
This makes MONY less of a DeFi experiment and more of JP Morgan’s attempt to redefine what “on-chain cash” means for large KYC capital pools.
It also puts the bank in more direct competition with BlackRock’s BUIDL and the broader tokenized Treasuries sector, which has become a market worth tens of billions as institutions seek blockchain-native, yield-bearing cash equivalents.
How GENIUS tips the scales
To understand the timing, we need to start with the GENIUS Act, the US stablecoin law passed earlier this year.
The law created a comprehensive licensing regime for payment stablecoins and, importantly, prohibited issuers from paying interest to token holders simply for holding the token.
As a result, the basic business model of regulated dollar stablecoins is now codified: issuers hold reserves in safe assets, collect the yield, and do not transmit it directly.
For corporate treasurers and crypto funds holding large stablecoin balances for weeks or months, this implies a structural opportunity cost. In a world where upfront rates are between 5-5%, this “stablecoin tax” can amount to around 4-5% per year on unused balances.
MONY is designed to sit outside this perimeter. It is structured as a Rule 506(c) private placement money market fund, not a payment stablecoin.
This means that it is treated as a security, sold only to accredited investors, and invested in fully collateralized U.S. Treasury bonds and Treasury repos.
As a money market fund, it is structured to return most of the underlying income to shareholders after fees, rather than trap the entire return at the issuer level.
Crypto research firm Asva Capital noted:
“Tokenized money market funds solve a key problem: unused stablecoins that generate zero return.”
By allowing qualified investors to subscribe and redeem in cash or USDC through JP Morgan’s Morgan Money platform, MONY effectively creates a two-step workflow.
This allows investors to use USDC or other payment tokens for transactions and then switch to MONY when the priority shifts to holding and earning.
For JP Morgan, this is not a side bet. The bank has invested approximately $100 million of its own capital in MONY and is marketing it directly to its global liquidity clientele.
As John Donohue, head of global liquidity at JP Morgan Asset Management, said, the firm expects other systemically important global banks to follow.
The message therefore is that tokenization has progressed beyond pilot projects; it is now a delivery mechanism for basic monetary products.
The guarantee competition
The economic logic becomes clearer when we consider collateral, not portfolios.
Crypto derivatives markets, prime brokerage platforms, and OTC desks require margin and collateral around the clock.
Historically, stablecoins like USDT and USDC have been the default because they are fast and widely accepted. However, they are not capital efficient in a high interest rate regime.
Tokenized monetary funds are created to fill this gap. Instead of placing $100 million in stablecoins that earn nothing, a fund or trading desk can hold $100 million in MMF tokens that track a conservative portfolio of short-term government assets while continuing to move at blockchain speed between controlled locations.
BlackRock’s BUIDL product has already shown how this can scale. Once it was accepted as collateral on the institutional rails of major exchanges, it ceased to be “tokenization as demo” and became part of the funding stack.
MONY addresses the same corridor, but with a different perimeter.
While BUIDL has moved aggressively into crypto-native platforms through partnerships with tokenization specialists, JP Morgan tightly ties MONY to its own Kinexys digital asset stack and the existing Morgan Money distribution network.
Thus, MONY’s speech is not aimed at the high-frequency offshore trading audience. It is aimed at pensioners, insurers, asset managers and businesses who already use JP Morgan money market funds and liquidity platforms today.
Donohue argued that tokenization can “fundamentally change the speed and efficiency of transactions.” Concretely, this means reducing settlement windows for collateral transfers from T+1 to intraday, without leaving the banking and fund regulation perimeter.
Additionally, the risk for stablecoins is not that they disappear. The fact is that a significant portion of large institutional balances that are currently in USDC or USDT for collateral and treasury purposes are instead migrating to tokenized MMFs, leaving stablecoins more concentrated in payments and open DeFi.
The Ethereum Signal
Perhaps the clearest signal in MONY’s design is the choice of Ethereum as its base chain.
JP Morgan has operated private registries and permissioned networks for years; Placing a flagship cash product on a public blockchain is a recognition of the convergence of liquidity, tools and counterparties.
BitMine’s Thomas Lee calls the move a watershed moment, simply stating that “Ethereum is the future of finance.” This claim is now supported by the fact that the world’s largest bank is rolling out its flagship tokenized cash product on the network.
However, the “public” launch of the blockchain is accompanied by an asterisk here. MONY is still a 506(c) security.
This means that its tokens can only be stored in authorized-listed KYC wallets, and transfers are controlled to comply with securities law and the fund’s own restrictions. This effectively divides the on-chain dollar instruments into two overlapping layers.
On the permissionless layer, retail users, high-frequency traders, and DeFi protocols will continue to rely on Tether, USDC, and similar tokens. Their value proposition is censorship resistance, universal composability, and ubiquity across protocols and chains.
On the permissioned layer, MONY and peer funds like BUIDL and tokenized money market funds from Goldman and BNY Mellon offer regulated, yield-producing cash equivalents to institutions that care more about audit trails, governance, and counterparty risk than permissionless composability. Their liquidity is thinner but more organized; their use cases are narrower but higher value per dollar.
Given this, JP Morgan is betting that the next significant wave of on-chain volume will come from this second group: treasurers who want the speed and integration of Ethereum without taking on the regulatory ambiguity that still surrounds much of DeFi.
A defensive pivot
Ultimately, MONY feels less like a revolution against the existing system and more like a defensive pivot within it.
For a decade, fintech and crypto companies have undercut banks’ payments, foreign exchange and custody businesses. Stablecoins then tackled the most fundamental layer: deposits and cash management, offering a bearer-like digital alternative that could sit entirely outside of bank balance sheets.
By launching a tokenized money market fund publicly, JP Morgan is attempting to bring some of this migration back within its own confines, even if it means cannibalizing some of its traditional deposit base.
George Gatch, CEO of JP Morgan Asset Management, emphasized “active management and innovation” as being at the heart of the offering, implicitly contrasting it with the passive float skimming model of stablecoin issuers.
Meanwhile, the bank is not alone. BlackRock, Goldman Sachs and BNY Mellon have already moved towards tokenized money market funds and tokenized cash equivalent products.
Thus, JP Morgan’s entry moves this trend from early experimentation to open competition among incumbents over who will hold the institutional “digital dollars” on public chains.
If this competition succeeds, the effect will not be the end of stablecoins nor the triumph of DeFi.
Rather, it would be a discrete consolidation, as the settlement channels will be public and the instruments used there will closely resemble traditional money market funds.
However, the institutions that gain a spread on global liquidity will, once again, be the same Wall Street names that dominated the pre-tokenization era.
