stablecoins<\/a>, which have recorded massive growth this year alone. Currently, the stablecoin sector has a market cap of over $305 billion, up sharply from $206 billion in January. <\/p>\nMore specifically, experts say BNY\u2019s fund could make it easier for issuers to meet regulatory requirements and provide more clarity to investors post-GENIUS, which was signed into law in July by President Donald Trump. However, while the fund helps with compliance, stablecoins still face risks from relying on a single fund.<\/p>\n
Compliant Solution for Stablecoin Reserves<\/h2>\n
According to Maja Vujinovic, CEO and co-founder of Digital Assets at FG Nexus, the new fund provides issuers with a safer, standardized place to hold the cash backing their tokens. <\/p>\n
Vujinovic noted that one of the biggest problems in the past was that each issuer handled reserves differently, creating confusion and trust issues. A regulated money-market structure, she told The Defiant, is designed to solve that.<\/p>\n
\u201cIt doesn\u2019t necessarily pay more; in fact, yields may be a bit lower because the fund is limited to the safest assets,\u201d she said. \u201cBut the trade-off is clearer rules, better oversight, and a big institution handling the reserves. That\u2019s why issuers may choose it: it makes compliance easier and boosts credibility.\u201d <\/p>\n
However, Vujinovic emphasized that the setup doesn\u2019t eliminate risk completely. Because BSRXX is a money-market fund and not insured by the FDIC, this means it can lose value. Still, in her view, the fund makes reserve management more transparent and professional. <\/p>\n
\u201cOverall, this is less about returns and more about creating reliable plumbing so stablecoins can scale safely in the mainstream financial system,\u201d she added.<\/p>\n
Ryne Saxe, co-founder and CEO of Eco, echoed Vujinovic\u2019s points and noted that the move could reduce the heavy operational lift that most issuers face today.<\/p>\n
\u201cToday, most stablecoin issuers default to the same accepted collateral model \u2014 backing issuance with short-term, highly liquid securities that are effectively dollar equivalent and pay some yield,\u201d he said. \u201dBut that means they all have overhead managing that collateral, and it’s a lot of redundant effort.\u201d<\/p>\n
Structural Risks <\/h2>\n
However, not all experts are convinced the fund is a major innovation. For example, Maghnus Mareneck, co-founder and co-CEO of Cosmos Labs, said that while BNY’s fund may help solve the compliant custody problem, it\u2019s table stakes and not a competitive advantage.<\/p>\n
He added that stablecoin issuers still face margin compression from fees (10-50 basis points), jurisdictional fragmentation beyond the U.S., and the fact that traditional money market fund structures aren\u2019t programmable. <\/p>\n
\u201cI want to see these funds go further \u2013 and enable money features such as conditional transfers or native interoperability,\u201d Mareneck said. \u201cThe real differentiation here will come from infrastructure ownership: protocol-level compliance across jurisdictions, native interoperability, and the ability for partners to build on top of your stablecoin platform.\u201d<\/p>\n
He added that BNY would have this if they built their own Layer 1 blockchain, but until then, stablecoin issuers using the BNY fund face \u201ccounterparty risk.\u201d <\/p>\n
\u201cBNY is the sole intermediary, which could lead to redemption timing mismatches during stress,\u201d Mareneck explained. \u201cUsers have no direct reserve claim; instead, they are exposed to both issuer and BNY fund performance, with the stablecoins’ peg stability dependent on withdrawal speed, rather than cryptographic proof.”<\/p>\n
Sid Sridhar, founder and CEO of BIMA Labs, echoed the risks from relying on a single fund, noting that in this scenario, a stablecoin takes on that fund\u2019s liquidity limitations and constraints.<\/p>\n
\u201cIf [the] redemption windows widen, if underlying assets get stressed, or if regulators impose new reporting rules, the stablecoin behaves less like crypto cash and more like a money market share,\u201d Sridhar said. \u201cThat breaks the core product promise.\u201d<\/p>\n
He concluded that users don\u2019t care about \u201cbrand names,\u201d they care about instantly redeemable dollars that behave the same way 24\/7. <\/p>\n
\u201cIf a stablecoin backed by the BNY product can maintain that standard, it will compete,\u201d he added. \u201cIf it cannot, the market will treat it as a slower, more permissioned version of what already exists, and liquidity will migrate toward more operationally agile models.\u201d<\/p>\n
The move comes a few months after BNY, alongside Goldman Sachs, unveiled a tokenized Money Market Fund (MMF) initiative aimed at bridging the gap between blockchain technology and traditional finance (TradFi).<\/p>\n
The initiative develops digital \u201cmirror\u201d tokens of MMF shares<\/a> using Goldman Sachs\u2019 GS DAP, which is a permissioned blockchain platform only accessible by authorized participants.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"The new money market fund aims to improve oversight and smooth operations for stablecoin issuers. The Bank of NY Mellon Corporation\u2019s (BNY) new money market fund, which launched last Thursday, Nov. 13, may provide greater safety for stablecoin reserves but does not eliminate all operational and structural risks, experts say. The fund, called the BNY […]<\/p>\n","protected":false},"author":2,"featured_media":411543,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[274,273,272,244,266,271,268,270,269,267],"class_list":["post-411542","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-de-fi","tag-crypto-finance","tag-decentralized-finance","tag-liquidity","tag-metamask","tag-pancake","tag-slippage","tag-sushiswap","tag-tronlink","tag-trust-wallet","tag-uniswap"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/411542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=411542"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/411542\/revisions"}],"predecessor-version":[{"id":411544,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/411542\/revisions\/411544"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/411543"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=411542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=411542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=411542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}