JP Morgan Enters On-Chain Cash Race with Tokenized Yield Fund

The timing of JP Morgan’s launch is inextricably linked to the GENIUS Act, the U.S. stablecoin law passed earlier this year. This statute established a full licensing regime for payment stablecoins like Tether’s USDT and Circle’s USDC. Crucially, it banned issuers from paying interest to token holders simply for holding the token. As a result, the core business model for regulated dollar stablecoins is now codified: issuers hold reserves in safe assets, collect the yield, and pass none of it through directly to holders.

For corporate treasurers and crypto funds that maintain large stablecoin balances for operational liquidity—often for weeks or months—this creates a significant structural opportunity cost. In a high-interest-rate environment where front-end rates hover in the mid-single digits, this “stablecoin tax” can amount to roughly 4–5% per year on idle balances. The GENIUS Act, therefore, did not just regulate stablecoins; it inadvertently carved out a market gap for yield-bearing alternatives that comply with securities law rather than payment rules.

JP Morgan’s My OnChain Net Yield Fund is designed explicitly to operate outside the perimeter of the GENIUS Act’s restrictions. It is structured not as a payment stablecoin but as a Rule 506(c) private placement money-market fund. This critical distinction means MONY is treated as a security, sold exclusively to accredited investors, and is invested in U.S. Treasuries and fully collateralized Treasury repos.

As a traditional money-market fund wrapped in a token that lives on the public Ethereum blockchain, MONY pairs the speed and programmability of crypto with a feature payment stablecoins cannot legally offer: yield. The fund is structured to pass most of the underlying income from its Treasury holdings back to shareholders after fees, rather than trapping the yield at the issuer level. As crypto research firm Asva Capital noted, “Tokenized money-market funds solve a key problem: idle stablecoins earning zero yield.”

This initiative is less a DeFi experiment and more JP Morgan’s attempt to redefine what “cash on-chain” means for large, know-your-customer (KYC) compliant pools of institutional capital. The prize is the billions of dollars currently sitting in zero-yield stablecoins and early tokenized funds. By offering a bank-controlled, regulator-friendly structure, JP Morgan aims to pull this liquidity back into the traditional financial system, albeit on a new technological rail.

The launch places JP Morgan in more direct competition with asset management giant BlackRock and its BUIDL fund, part of the broader tokenized Treasuries sector. This market has grown to tens of billions of dollars as institutions increasingly seek yield-bearing, blockchain-native cash equivalents. MONY’s entry signifies a major validation of the tokenized asset space and intensifies the race to provide the dominant on-chain vehicle for institutional cash management, blending the trust and regulatory recognition of TradFi with the efficiency of crypto infrastructure.