U.S. Asset Managers Gear Up for Battle Over Stablecoin Reserves

The fight for stablecoin reserves: Over the past few weeks, three of the largest U.S. asset managers — Morgan Stanley, BlackRock, and JPMorgan — have launched or filed for money market funds purpose-built for stablecoin issuer reserves. The timing is deliberate. In January 2027, the GENIUS Act is expected to take effect, requiring every U.S. stablecoin to be backed 1:1 by short-dated Treasuries, bank deposits, or government-registered money market funds holding those assets.

Why it matters: Stablecoin reserves are already a major revenue driver for some asset managers. BlackRock already manages roughly $67 billion of Circle’s USDC reserves, about 87% of the stablecoin’s backing, generating more than $100 million in annual management fees at the fund’s ~0.16% rate. And with Citi expecting the stablecoin market to exceed $2 trillion by 2030, asset managers are now competing for a foothold in one of the fastest-growing pools of capital.

• “The significant increase in stablecoin issuers as well as the growing number of assets held in stablecoins represents an evolving portion of the marketplace that is ripe for future growth,” noted Fred McMullen, Co-Head of Global Liquidity at Morgan Stanley Investment Management.

Three funds, three positions on tokenization: While the three managers target the same market, their funds occupy different points on the spectrum between traditional and tokenized infrastructure.

• Morgan Stanley’s MSNXX is the most conventional. It uses a traditional shareholder register, with subscriptions and redemptions running through standard fund rails. No blockchain component.

• JPMorgan’s JLTXX sits in the middle. Token balances and smart contracts enable blockchain-based redemption requests and transfers, but the official record of ownership remains the traditional Investor Register maintained by the transfer agent.

• BlackRock’s BRSRV goes furthest. Shares are recorded on public blockchains and can be transferred peer-to-peer between whitelisted wallets. Together with an offchain identity register maintained by Securitize’s transfer agent, the blockchain record forms the fund’s official shareholder register.

The BUIDL question: For BlackRock, BRSRV would be its second tokenized money market fund. Its first, BUIDL, now sits at $2.4 billion in TVL and is used as collateral by stablecoins such as Ethena’s USDtb. But because BUIDL is not classified as a government money market fund, its role under the GENIUS Act remains unclear. BRSRV appears designed to meet that requirement.

The cap fight: Still, whether a fund like BRSRV can even hold a meaningful share of any issuer’s reserves is now itself in regulatory doubt. In its proposed GENIUS Act rulemaking, the OCC has asked whether tokenized reserve assets should be capped at 20% of a stablecoin issuer’s total reserves. The agency’s stated concern is that, even when the underlying assets are high-quality, putting ownership onchain adds operational, custody, and settlement complexity that could complicate reserve management during heavy redemptions.

The pushback: BlackRock is not waiting for the rules to land. In a 17-page comment letter to the OCC, the asset manager urged regulators to drop the proposed cap, arguing that reserve risk should be assessed based on the underlying asset’s liquidity, duration, and credit quality, not on whether ownership of that asset is recorded on a blockchain.