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Global banking giant BNY Mellon has launched a money market fund designed to hold reserves for US stablecoin issuers.
According to a Thursday announcementthe fund is open to US stablecoin issuers and other qualified institutional investors operating in fiduciary, agency, advisory, brokerage or custodial roles.
The fund is designed to maintain the cash reserves mandated by the GENIUS Act, the July 2025 law that establishes the first federal framework for American stablecoins and defines the standards for their supporting assets. Will not invest directly in stablecoins.
According to background documents, will invest in correct terms US Treasury securities, overnight repo backed by Treasurys or cash, and cash holdings. It aims to maintain a stable price of $1 and exposure at least 99.5% to government-backed instruments, with shares intended to serve as reserves for pending payment stablecoins.
Anchorage Digital, a federal digital asset bank in the United States, provided the fund’s initial investment. Nathan McCauley, the bank’s co-founder and CEO, said the bank sees the move from BNY “as essential to bringing together the trust, transparency and regulatory rigor that will define the next era of digital finance.”
The new background follows BNY’s recent partnership with Securitize to develop a tokenized vehicle offering exposure to AAA-rated collateralized loan obligations onchain.
Related: BNY explores tokenized deposits to power $2.5T daily payments network: Bloomberg
The rise of stablecoins
Since the passage of the GENIUS Act in the United States, the stablecoin race has been heating up. According to data by DefiLlama, the current stablecoin market is over $305 billion, with a recent BNY analyst report predicting it could reach $1.5. trillion at the end of the decade.
While the market has been dominated by large issuers such as Tether’s USDt (USDT) and Circle’s USDC (USDC), new players are entering the space at a rapid pace.
In March, World Liberty Financial, a crypto venture supported by US President Donald Trumplaunched USD1, a stablecoin pegged to the US dollar. It is now the seventh largest stablecoin by market capitalization, with $2.86 billion.
In August, self-custodial wallet MetaMask announced the launch of its dollar-backed stablecoin, MetaMask USD (mUSD), which will be integrated into its Web3 portfolio.
Innovation around stablecoins is not limited to the United States. In Europe, nine banks met in September to develop a euro-denominated stablecoin aimed at challenging the dominance of the US dollar in the sector, with a launch planned for the second half of 2026.
Magazine: China officially hates stablecoins, DBS trades Bitcoin options: Asia Express
