- Moody’s analysis of tokenized money market funds identifies key benefits like 24/7 trading and fractionalization while noting blockchain-related risks.
- Two tokenized funds with traditional financial institution connections received Aa-bf ratings, while TBILL was downgraded to Baa-bf following a co-founder’s departure.
- Despite its lower rating, TBILL maintains the highest assets under management at $129 million among the three tokenized funds.
Moody’s has released a new analysis of fund tokenization based on its assessment of three tokenized money market funds, according to a report published yesterday. The credit rating agency found that only one of the three funds lacks strong ties to traditional financial institutions, and that fund was recently downgraded following a co-founder’s controversial departure.
The analysis highlights several advantages of fund tokenization, including round-the-clock trading capabilities and fractionalization benefits for both asset managers and investors. Asset managers can potentially realize substantial cost savings through tokenization, though Moody’s also identified potential risks associated with permissionless blockchains, limited track records of tokenization startups, and regulatory uncertainties.
Blockchain Considerations and Fund Ratings
The rating agency expressed greater confidence in Ethereum-based issuances due to the blockchain’s established institutional usage compared to alternatives. Moody’s noted that multi-blockchain issuances potentially expose funds to more disruptions, though all assessed funds feature permissioned token access and maintain off-chain investor records as safeguards against Hacking.
Two funds with traditional finance connections—the Delta Wellington Ultra Short On-chain Treasury Fund (ULTRA) and the Janus Henderson Anemoy Treasury Fund (JTRSY)—received Aa-bf ratings. While startups serve as primary asset managers, established financial institutions handle day-to-day operations as sub-advisors, which Moody’s considered in its assessment.
Controversial Downgrade and Leadership Issues
The third fund, Treasury Bills Institutional Liquidity (TBILL), was downgraded from A-bf to Baa-bf. Moody’s attributed this partly to “terminated its relationship with a co-founder in November 2024,” referring to Eugene Ng who faced allegations of tampering with a woman’s drink at a bar, as widely reported.
Complicating matters, Ng was previously a founding partner at DWF Labs, a crypto market maker that the Binance-investigation-suspicious-trading-dwf-5f481f9d”>Wall Street Journal had reported was allegedly involved in wash trading. The WSJ wrote that DWF offered to “drive up the prices of tokens and create what it called ‘artificial volume'” to attract traders.
Despite its downgraded rating, TBILL maintains the highest assets under management at $129 million, followed closely by JTRSY, while ULTRA trails at $22 million, with most holdings owned by Ondo Finance. The fund was tokenized by OpenEden, which was co-founded by Eugene Ng alongside Jeremy Ng, who serves as CEO after previously establishing Gemini‘s APAC division.
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