Tokenized money market funds offered by BlackRock and Franklin Templeton are designed to attract crypto users, according to Bloomberg. A panel on the CFTC’s Global Markets Advisory Committee plans to make recommendations by the end of the year on how registered firms can use distributed ledger technology to hold and transfer non-cash collateral.

The recommendations will provide market participants with a legal and regulatory framework to support the use of blockchain technology in the context of institutional margin requirements. Caroline Butler, co-chair of the group, said collateral has become a major use case and driver for tokenization.

Currently, Franklin fund-related tokens can be transferred between institutional shareholders on the Stellar blockchain. In June, Franklin began allowing users to convert USDC stablecoins into U.S. dollars to invest in fund shares. Hidden Road and FalconX have begun accepting BlackRock's BUIDL token as collateral.

Almost all companies on Wall Street are working on tokenization projects. State Street is involved in a pilot to automatically calculate margin for foreign exchange forward transactions using distributed ledger technology. Citigroup is working with Wellington Management and WisdomTree to explore tokenization of private markets. JPMorgan has developed an application that allows investors to use assets as collateral.

Butler, BNY's global head of digital assets, said that over the past 18 months, tokenization has evolved from proof-of-concept to actual use cases, with clients' demand for more efficient use of assets being the main driving force.