In accordance with Forklog, the Bank for International Settlements (BIS) has issued a report warning that tokenized money market funds and their integration with DeFi pose systemic risks to the global financial system. These funds, while digital, retain vulnerabilities similar to traditional counterparts and may amplify issues seen in both traditional money market funds and stablecoins. A key concern is the liquidity mismatch between instant redemption of tokenized shares and traditional settlement cycles (T+1/T+2). During financial stress, this could trigger mass redemptions and accelerate crises. The report also highlights operational and technological risks, including cyberattacks and smart contract vulnerabilities. Despite these risks, the sector has grown rapidly, with a 265% increase in capitalization to $9 billion in the past year.
BIS Warns of Global Financial Risks from Tokenized Money Market Funds
ForklogShare
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.