Over the past week, several Wall Street institutions have almost simultaneously advanced the tokenized currency market fund layout.
On May 12, JPMorgan Chase announced the launch of the second tokenized currency market fund, JLTXX, on Ethereum; on the same day, Kraken's parent company Payward signed a strategic partnership with Franklin Templeton, planning to integrate the BENJI series tokenized funds into the Kraken platform as institutional collateral and cash management tools.
Shortly before that, BlackRock re-submitted two tokenized fund applications to the SEC, continuing to deepen its collaboration with Securitize. This series of concentrated actions reflects that regulatory expectations are rapidly driving institutional supply-side layout.
Wall Street's Pincer Movement, From Custodial Back-End to Front-End Collateral
Facing the same regulatory directive, Wall Street giants revealed their fangs devouring Crypto liquidity from different sides.
The "King of Scale," BlackRock, once again joined forces with long-term partner Securitize, submitted two new applications: one is the "purebred" tool BRSRV designed to comply with the GENIUS Act, with investment scope strictly limited to short-term debt within 93 days; the other is to tokenize its existing government currency market fund of around $7 billion, launching the tokenized shares BSTBL.
Considering it already manages around $650 billion in reserves for Circle, BlackRock is attempting to fully tokenize its massive traditional stablecoin custodian business, downgrading the original issuer to only be responsible for front-end issuance as a "distributor."
JPMorgan Chase quickly followed up with the launch of JLTXX (an on-chain liquidity token fund), a product running on its in-house Kinexys (formerly Onyx) platform and initially launching on Ethereum, explicitly stating in the prospectus that it is designed to meet the reserve needs of stablecoin issuers.
JPMorgan Chase is eyeing the future banking path. With the GENIUS Act opening a clear path for banks to issue stablecoins, JLTXX is essentially preparing in advance, attempting to become the standard clearing and reserve back-end for future GSIBs (Global Systemically Important Banks) issuing stablecoins.
In contrast, the collaboration between Franklin Templeton and crypto exchange platform Kraken broke away from the pure reserve mindset of the first two, aiming to bridge retail and collateral. The core of their cooperation is integrating BENJI (a tokenized currency fund) into Kraken as institutional trading collateral and cash management tools.
Since the future CLARITY Act may prohibit stablecoins from paying interest directly, tokenized assets like BENJI, which can both earn interest and serve as underlying collateral, have cleverly circumvented the stablecoin interest ban, in collaboration with Kraken's trading platform and communities such as xStocks. The traditional asset management hand has directly reached into the collateral layer of Crypto-native transactions.
Additionally, during the same period, Morgan Stanley also launched the MSNXX fund that meets compliance reserve requirements but does not utilize any on-chain settlement technology. Within the same compliance framework, whether to go on-chain has become a watershed for differentiation and competition among giants. Simply meeting compliance is not enough; the round-the-clock liquidity and asset composability brought by on-chain settlement are the true moat of the next-generation reserve currency.
The GENIUS Act Defines a Market Segment
On July 18, 2025, President Trump signed the GENIUS Act into law. Section 4 of the bill provides a concise yet clearly defined list of "Qualified Reserve Assets": Federal Reserve account balances, insured deposits, Treasury bills with a remaining or original maturity of no more than 93 days, overnight repurchase agreements collateralized by Treasury bills, and government money market funds that only invest in the above-mentioned assets.
For every issued dollar of stablecoin, it must be backed by the aforementioned assets on a 1:1 basis and is prohibited from paying any interest or return to the holders. The rule is simple, but it has established a clear product boundary around the "Qualified Reserve."
Treasury Secretary Benson stated to the Senate Appropriations Subcommittee last June that the stablecoin market reaching $20 trillion "is a very reasonable number." Citigroup's forecast is $19 trillion in the base scenario by 2030, and $40 trillion in the optimistic scenario; Standard Chartered Bank estimates that the tokenized money market fund alone will reach $750 billion by then. Even conservatively, with the "Qualified Reserve" compliance threshold, a demand pool of tens of trillions of dollars has already been defined.
The implementation rules of the GENIUS Act must be finalized by July 18, 2026, and the act will be fully effective no later than January 18, 2027. Regulatory agencies such as the OCC and FDIC are actively advancing rulemaking. The supply side cannot wait until then to act.
The CLARITY Act is Another Puzzle Piece
The U.S. Senate Banking Committee is scheduled to markup the CLARITY Act on May 14. This bill complements the GENIUS Act. GENIUS regulates stablecoin issuance, while CLARITY defines the digital asset market structure and the jurisdictional boundaries of the SEC/CFTC.
There is a key interface between the two. The GENIUS Act prohibits stablecoins from paying interest to holders, while the CLARITY Act draft text distinguishes between business incentives and passive income, also leaving some room for non-stablecoin tokenized assets to generate income.
This firewall is precisely what is making currency market funds like BENJI become on-chain yield-generating cash management tools beyond stablecoins. Not being a stablecoin, they are not bound by the interest payment ban, yet they can settle in real-time, serve as collateral, and be traded 24/7. Kraken's integration of BENJI is based on the opportunities presented by this regulatory framework gap.
Whether the CLARITY Act can proceed as planned will also determine the integrity of this business architecture.
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