BlackRock Advances Tokenized Funds for Instant Collateral Use

BlackRock is pushing for tokenized money market funds (tMMFs) to streamline collateral processes, potentially eliminating the multi-day wait for cash settlements. Nikhil Sharma, BlackRock’s Director of Digital Assets, highlighted this during his upcoming talk at TOKEN2049 Singapore 2026. He argues that tokenized funds can be used directly as collateral, removing the need for redemption steps and allowing capital to remain productive.

Currently, institutions must redeem money market fund shares for cash before using them as collateral. This process can take days, leaving capital idle. Tokenized funds, however, can be transferred on-chain immediately, keeping the holder’s yield intact while providing the counterparty with a usable asset. BlackRock aims to make this process seamless for institutional use.

BlackRock has been expanding its tokenization efforts, launching two new tokenized funds, BSTBL and BRSRV, on August 3, 2026. These funds are designed to meet eligibility requirements under the US GENIUS Act for stablecoin reserves. The firm also manages BUIDL, a tokenized fund introduced in March 2024 with around $2.5 billion in assets, and has tokenized share classes for its European UCITS money market funds, totaling $311 billion in assets as of June 30, 2026. The company is collaborating with J.P. Morgan’s Kinexys platform for 24/7 peer-to-peer transfers.

The shift to tokenized collateral could benefit both traditional finance and crypto markets. Institutional traders managing margin across multiple venues may reduce the need for excess buffers, while crypto exchanges, lenders, and derivatives platforms gain a yield-bearing, regulated alternative to holding stablecoins. However, adoption depends on counterparties accepting tokenized fund shares as collateral, along with resolving legal and operational challenges.