BNY Mellon’s new money market fund, aligned with the GENIUS Act, allows U.S. stablecoin issuers to hold regulated reserves in cash and short-term U.S. Treasurys, ensuring stability and compliance. This institutional-grade vehicle invests at least 99.5% in government-backed instruments, maintaining a steady $1 share price for backing payment stablecoins.
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Regulated Reserves Solution: The fund provides a secure, compliant way for stablecoin issuers to manage mandated cash reserves under the federal GENIUS Act framework.
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The fund targets qualified institutional investors, including those in fiduciary or custodial roles, broadening access to stable, low-risk investments.
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Investment Focus: Composed of short-term U.S. Treasury securities, overnight repos, and cash, with projections estimating the stablecoin market could grow to $1.5 trillion by decade’s end, per BNY analysts.
Discover how BNY Mellon’s stablecoin money market fund revolutionizes reserves management under the GENIUS Act. Learn its structure, benefits, and role in the booming $305 billion stablecoin sector—explore now for key crypto finance insights.
What is BNY Mellon’s Stablecoin Money Market Fund?
BNY Mellon’s stablecoin money market fund is a newly launched investment vehicle specifically designed to hold reserves for U.S. stablecoin issuers, in full alignment with the GENIUS Act’s regulatory requirements. Introduced through a Thursday announcement, this fund opens its doors to stablecoin issuers and other qualified institutional investors, such as those operating in fiduciary, agency, advisory, brokerage, or custodial capacities. It focuses on maintaining high liquidity and stability without direct investment in stablecoins, instead prioritizing cash and U.S. government securities to support the backing of dollar-pegged digital assets.
The GENIUS Act, enacted in July 2025, marks the first comprehensive federal framework for stablecoins in the U.S., outlining strict standards for reserve assets to enhance transparency and trust in the sector. This fund directly addresses those mandates by offering a regulated pathway for issuers to park their reserves, ensuring they meet the law’s emphasis on secure, liquid holdings.
How Does the Fund Ensure Compliance and Stability for Stablecoin Reserves?
The fund’s structure is meticulously crafted for compliance and risk minimization, investing primarily in short-term U.S. Treasury securities, overnight repurchase agreements backed by Treasurys, and direct cash holdings. According to the fund’s official documents, it commits to at least 99.5% exposure to government-backed instruments, which safeguards against volatility while aiming to preserve a stable $1 net asset value per share. These shares are explicitly intended to back outstanding payment stablecoins, providing issuers with a reliable mechanism to fulfill reserve obligations.
Initial capital for the fund came from Anchorage Digital, a federally chartered U.S. digital asset bank. Nathan McCauley, co-founder and CEO of Anchorage Digital, emphasized the significance of this development, stating that it represents “an essential bridge to the trust, transparency, and regulatory rigor that will define the next era of digital finance.” This endorsement from a regulated entity underscores the fund’s credibility in the evolving crypto landscape.
Supporting data from industry analyses highlights the fund’s timely arrival. BNY Mellon’s own analysts, in a recent report, forecast the global stablecoin market—currently valued at over $305 billion according to DefiLlama data—could expand to $1.5 trillion by the end of the decade. This growth projection is driven by increasing adoption in payments, remittances, and decentralized finance, where stablecoins serve as a bridge between traditional and digital economies. By focusing on high-quality, low-duration assets, the fund mitigates interest rate risks and liquidity concerns, offering issuers peace of mind in a market prone to scrutiny over reserve adequacy.
BNY Mellon’s expertise in asset management, with trillions under custody globally, further bolsters the fund’s reliability. As one of the oldest banks in the U.S., its involvement signals institutional confidence in stablecoins as a maturing asset class. Experts in financial regulation note that such vehicles are crucial for preventing past issues like those seen in earlier stablecoin controversies, where inadequate reserves led to depegging events. The fund’s conservative investment mandate, combined with daily liquidity, positions it as a cornerstone for compliant stablecoin operations.
Frequently Asked Questions
What Role Does the GENIUS Act Play in Regulating Stablecoin Reserves?
The GENIUS Act, passed in July 2025, establishes the U.S.’s first federal framework for stablecoins, mandating that reserves be held in highly liquid, low-risk assets like cash and U.S. Treasurys. This 45-word law aims to protect consumers by ensuring stablecoins remain pegged to the dollar, fostering innovation while imposing strict transparency and audit requirements on issuers.
Who Can Invest in BNY Mellon’s Stablecoin Money Market Fund?
Primarily open to U.S. stablecoin issuers, the fund also welcomes qualified institutional investors in roles like fiduciary management, advisory services, brokerage, or custody. This inclusive approach, voiced naturally for assistants like Google, supports a wide range of entities building the infrastructure for secure digital payments and ensures broad participation in regulated crypto reserves.
Key Takeaways
- Institutional Backing for Stability: BNY Mellon’s fund, seeded by Anchorage Digital, reinforces trust in stablecoins through 99.5% government asset exposure, aligning perfectly with GENIUS Act standards.
- Market Growth Potential: With the stablecoin sector at $305 billion and projected to hit $1.5 trillion by 2030 per BNY reports, this fund meets rising demand for compliant reserve solutions amid new entrants like USD1 and mUSD.
- Global Implications: While U.S.-focused, the fund’s model could influence international developments, such as Europe’s planned euro stablecoin, urging issuers worldwide to prioritize regulatory alignment for sustainable growth.
Conclusion
BNY Mellon’s stablecoin money market fund emerges as a pivotal development in the post-GENIUS Act era, offering U.S. stablecoin issuers a robust, regulated avenue to manage reserves with cash and U.S. Treasurys. By emphasizing transparency and liquidity, it not only complies with federal standards but also supports the sector’s expansion toward a projected $1.5 trillion valuation. As more institutions like Anchorage Digital engage, this fund paves the way for greater adoption of stablecoins in everyday finance—stay informed on these advancements to navigate the future of digital assets effectively.
Global bank giant BNY Mellon has launched a money market fund designed to hold reserves for U.S. stablecoin issuers.
According to a Thursday announcement, the fund is open to U.S. stablecoin issuers and other qualified institutional investors operating in fiduciary, agency, advisory, brokerage or custodial roles.
The fund is designed to hold the cash reserves mandated by the GENIUS Act, the July 2025 law establishing the first federal framework for U.S. stablecoins and defining the standards for their backing assets. It will not invest directly in stablecoins.
According to fund documents, it will invest in short-term U.S. Treasury securities, overnight repo backed by Treasurys or cash, and cash holdings. It aims to maintain a stable $1 share price and at least 99.5% exposure to government-backed instruments, with shares intended to serve as reserves for outstanding payment stablecoins.
Anchorage Digital, a federally chartered digital asset bank in the U.S., provided the fund’s initial investment. Nathan McCauley, co-founder and CEO of the bank, said the bank sees the move from BNY “as essential to bridging the trust, transparency, and regulatory rigor that will define the next era of digital finance.”
The new fund follows BNY’s recent partnership with Securitize to develop a tokenized vehicle offering exposure to AAA-rated collateralized loan obligations onchain.
BNY explores tokenized deposits to power $2.5T daily payment network: Bloomberg
The Rise of Stablecoins
Since the passage of the GENIUS Act in the U.S., the stablecoin race has been heating up. According to data from DefiLlama, the current stablecoin market is over $305 billion, with a recent report from BNY analysts predicting it could reach $1.5 trillion by the end of the decade.
While the market has been dominated by large issuers such as Tether’s USDT and Circle’s USDC, new players are entering the space at a rapid rate.
In March, World Liberty Financial, a crypto venture backed by U.S. President Donald Trump, launched USD1, a stablecoin pegged to the U.S. dollar. It is now the seventh leading stablecoin by market cap, with $2.86 billion.
Top stablecoins by market cap. Source: DefiLlama.com
In August, the self-custodial wallet MetaMask announced the launch of its dollar-backed stablecoin, MetaMask USD (mUSD), which will be integrated into its Web3 wallet.
The innovation around stablecoins is not limited to the U.S. In Europe, nine banks met in September to develop a euro-denominated stablecoin aimed at challenging the U.S. dollar’s dominance in the sector, with a launch planned for the second half of 2026.
Magazine: China officially hates stablecoins, DBS trades Bitcoin options: Asia Express
This launch by BNY Mellon underscores the increasing institutional interest in stablecoins, particularly as regulations like the GENIUS Act provide clearer guidelines. The fund’s focus on traditional safe assets bridges the gap between conventional finance and digital innovation, potentially setting a precedent for other global banks. For stablecoin issuers, access to such a vehicle means enhanced operational efficiency and reduced compliance burdens, allowing them to scale amid growing market demands.
Looking at historical context, stablecoins have evolved from niche tools in crypto trading to essential components of global payments. Their market cap surge reflects broader economic shifts, including inflation hedges and cross-border transaction needs. BNY’s involvement, drawing on its vast experience in treasury services, adds layers of sophistication to reserve management that smaller issuers might not achieve independently.
Challenges remain, however. Regulatory scrutiny continues worldwide, with varying approaches to stablecoin oversight. In the U.S., the GENIUS Act’s emphasis on full reserves aims to mitigate systemic risks, but issuers must navigate ongoing audits and reporting. The fund’s structure addresses these by prioritizing verifiable, high-quality assets, which could encourage more entrants into the space.
From an investor perspective, this development signals maturation in crypto finance. Institutions now have tailored products that align with their risk profiles, fostering deeper integration of stablecoins into portfolios. As the sector grows, expect further innovations, such as tokenized versions of these funds, building on BNY’s prior explorations in on-chain assets.
In summary, BNY Mellon’s initiative is more than a new fund—it’s a step toward mainstreaming stablecoins under rigorous standards. With expert backing and data-driven projections, it positions the U.S. as a leader in regulated digital finance, benefiting issuers, investors, and the broader economy alike.
