Tokenised treasuries and money market funds.

In almost every case, an issuer does not tokenise the bond itself but a participation in a fund or structure holding short-dated government bonds and similar collateral. The token therefore represents a claim on the fund's value, not a direct title to a specific bond line at a central bank or treasury.

That distinction matters because it determines where each risk sits. The fund manager buys and sells the underlying bonds, values the portfolio and handles reporting to the supervisor. The blockchain then records who holds which share of the fund and enables transfers between approved parties, often faster than a traditional fund administrator would.

Some structures go further and try to issue the bond itself as a security token, with the blockchain register as the official ownership register. That is legally possible in jurisdictions with enabling law, but in practice the fund variant dominates today because it settles more easily against existing bond markets.

The yield of a tokenised money market fund follows the rate on short-dated government paper, after management fees and any costs for the token infrastructure. There is no extra yield coming from the blockchain itself; the token changes nothing about the underlying cash flows, it only changes how you access it and how quickly you can enter and exit.

Some structures credit yield daily by increasing the number of tokens in your wallet, others let the value per token rise while the token count stays flat. Both are accounting-equivalent, but it is worth knowing which model an issuer uses for tax reporting in your own country.

Watch the fee stack: besides standard fund fees there can be charges for issuance, redemption and maintaining the wallet whitelist. On smaller amounts those fixed costs can weigh relatively heavily.

Most tokenised treasury funds today target professional or qualified investors, with minimums that often still run into tens of thousands of euros. Access runs through identification with the issuer, after which your wallet address is added to a whitelist that permits transfers. Without that step the smart contract simply rejects your transaction.

A smaller number of providers do target retail investors, usually via an app that hides the blockchain layer behind an ordinary user experience. KYC remains mandatory there too and the fund stays under financial supervision; the difference from a classic money market fund lies mainly in the speed of entering and exiting.

Interest rate risk and credit risk of the underlying bonds remain fully intact: a tokenised fund is not a risk-free investment, even though the underlying bond usually comes close. During sharp rate moves, the value of short-dated paper can dip temporarily even if the fund is held to maturity.

There is also operational risk around the link between the blockchain and the fund's official books. If the token and the official accounting drift apart due to a contract or administrator error, ambiguity arises about who actually owns what. Issuers try to cover this with regular reconciliation and external audits, but it remains an extra layer compared with a classic fund.

Tokenised money market funds are often mentioned in the same breath as stablecoins backed by government bonds, but they are legally different things. A stablecoin usually promises a fixed value per unit and pays no yield to the holder; a tokenised fund is an investment product whose value moves with the underlying rate and that does pass on return to the holder.

That distinction also carries supervisory consequences: stablecoins fall under MiCA's e-money or asset-referenced token rules in the EU, while a tokenised money market fund falls under existing fund and securities regulation. Do not conflate the two when assessing an offer.