Morgan Stanley Targets BlackRock With Money Market Fund for Stablecoin Issuers

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In brief - Morgan Stanley is positioning itself as a firm that can help stablecoin issuers manage reserves with a money market fund. - The product was specifically designed to comply with the GENIUS Act, and address a “significant increase in stablecoin issuers.” - Circle parks its reserves in a BlackRock-managed money market fund, which was valued around $78 billion on Friday. Morgan Stanley debuted a money market fund intended for stablecoin issuers on Friday, positioning the product as a way for companies like Circle to manage their reserves. The Stablecoin Reserves Portfolio (MSNXX), which is available on days when the New York Stock Exchange is open for business, will enable companies to invest the reserves that back their tokens, the investment bank with $9.3 trillion in assets said in an announcement. Although stablecoin issuers often back their tokens with a mix of cash and U.S. Treasuries, Morgan Stanley indicated that MSNXX will also allocate to notes and bonds and certain overnight repurchase agreements collateralized by liquid assets. The product was specifically designed to comply with the GENIUS Act, a federal framework for stablecoins enacted last year that mandates reserve requirements. In a statement, Morgan Stanley Co-Head of Global Liquidity Fred McMullen noted the sector’s recent growth, specifically a “significant increase in stablecoin issuers as well as the growing number of assets held in stablecoins.” Whether it’s new use cases in traditional finance or AI-agent payments, stablecoins are expected to become a $2 trillion market by the end of 2028, or in roughly 32 months, according to a recent note from investment bank Standard Chartered. On Friday, the value of all stablecoins stood at $316 billion, according to CoinGecko. The second-largest stablecoin issuer, Circle, currently holds the majority of its USDC reserves in the Circle Reserve Fund (USDXX), a BlackRock-managed money market fund. Decentralized finance projects like Ethena, which offers a synthetic dollar dubbed USDe, have forged a different path: using BlackRock’s tokenized money market fund, BUIDL. The product issued on nine blockchains was valued at $2.5 billion on Friday, according to RWA.xyz. To be sure, Morgan Stanley’s product won’t trade on-chain. However, Amy Oldenburg, the bank’s head of digital-asset strategy, recently told Decrypt that tokenized money market funds are “definitely a path forward” for the Wall Street giant’s product roadmap. Earlier this month, Morgan Stanley debuted a spot Bitcoin ETF, which dovetails with the firm’s army of roughly 16,000 financial advisors. Since the product debuted just over two weeks ago, it has generated $173 million in net inflows, according to Farside Investors.

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