Central banks warn DeFi and $9bn tokenised money-market funds jeopardise global finance

Core Insights - Tokenised money-market funds have reached a $9 billion sector in the crypto market, but the Bank for International Settlements (BIS) has issued early risk warnings regarding their exposure to traditional money-market tensions [1][2][3] Group 1: Market Growth and Potential - Tokenised money-market funds allow investors to earn yield on cash instruments directly on-chain, mirroring traditional money market funds [2] - The sector has experienced significant growth, increasing by 265% over the last year, with predictions of reaching $250 billion in the next three years [4] - Major institutional players such as BlackRock, Franklin Templeton, and UBS are entering the tokenised money market sector, indicating rising institutional interest [5] Group 2: Risks and Concerns - The BIS report highlights that tokenised money-market funds may amplify risks similar to those found in conventional money market funds and stablecoins [2][3] - Integration with decentralized finance (DeFi) could heighten market stresses due to leverage and interconnected protocols, potentially leading to quicker and more damaging market shocks [3] - Proactive measures are necessary to mitigate market risks before they evolve into systemic threats that could impact both crypto and traditional markets [6]