On Friday, Morgan Stanley introduced a money market fund specifically designed for stablecoin issuers, aiming to provide companies like Circle with better reserve management options. The new fund, named the Stablecoin Reserves Portfolio (MSNXX), will be available on New York Stock Exchange business days and allows firms to invest reserves backing their tokens, according to the bank which manages $9.3 trillion in assets.
Although stablecoins are commonly backed by cash and U.S. Treasuries, Morgan Stanley stated that MSNXX will also include allocations to notes, bonds, and certain overnight repurchase agreements collateralized by liquid assets.
The fund aligns with the GENIUS Act’s federal requirements for stablecoin reserves, a framework established last year. Fred McMullen, Co-Head of Global Liquidity at Morgan Stanley, highlighted in a statement the sector’s expansion, noting an increase in both stablecoin issuers and the volume of assets held in stablecoins.
Stablecoins are projected to reach a $2 trillion market size by the end of 2028, or in about 32 months, as per a recent analysis by Standard Chartered. As of Friday, stablecoins were valued at $316 billion, according to CoinGecko. Circle, the second-largest issuer, primarily holds its USDC reserves in BlackRock’s managed money market fund, USDXX.
Decentralized finance initiatives like Ethena have opted for a unique path with their synthetic dollar, USDe, using BlackRock’s tokenized money market fund BUIDL, which spans nine blockchains and was valued at $2.5 billion as of Friday, based on RWA.xyz data.
Morgan Stanley’s offering won’t be traded on-chain; however, Amy Oldenburg, the bank’s digital-asset strategy head, recently indicated to Decrypt that tokenized money market funds represent a strategic direction for Morgan Stanley’s product development.
Earlier this month, Morgan Stanley also launched a spot Bitcoin ETF. The firm, supported by approximately 16,000 financial advisors, has seen $173 million in net inflows for the ETF since its debut just over two weeks ago, according to Farside Investors.