JP Morgan clarifies MONY mechanics as tokenized collateral remains complex

Following the launch earlier this week of JP Morgan Asset Management’s first tokenized fund, MONY, additional operational details were provided by Kara Kennedy, global co-head of JP Morgan’s Kinexys distributed ledger unit. While Kennedy works in a separate company from the asset manager, she shared specifics about how the fund’s stablecoin settlement works and offered her perspective on the emerging use of tokenized money market funds as collateral.

MONY allows institutional clients to subscribe and redeem using USDC, though the asset manager converts the stablecoin to cash for the underlying investment. This keeps investors’ funds on chain while maintaining traditional fund operations. Given the fund has only just launched, it does not yet support 24/7 subscriptions and redemptions. “That necessitates additional changes in the operating model at the fund level. And I would anticipate that sort of change will be driven by investor demand,” Kennedy said. The same applies to other potential features, including the ability to use JP Morgan’s JPMD deposit token for subscriptions or adding programmability.

Deployment on other blockchains will also depend on client requests, though Kennedy noted that non-Ethereum chains would require additional work that needs commercial justification. Given that Kennedy works in a separate unit from JP Morgan Asset Management, she would not comment on the target audience for MONY. To date, most demand for tokenized funds has come from crypto natives, particularly stablecoin issuers and web3 asset managers seeking yield.

Kennedy, who led digital assets for JP Morgan’s securities services until recently, said asset managers are increasingly viewing on chain deployment as a way to unlock traditional uses for money market funds, particularly as collateral.

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