A recent report by Bank of America suggests that while the demand for Treasury bills from stablecoins may reach between $25 billion and $75 billion in the next year, it will not significantly alter the dynamics of T-bills but will challenge money market funds (MMFs) more directly. The report points out that money market funds have limited time to adapt, especially as some clients are investigating tokenization as a preventative strategy against the competitive yields that stablecoins might offer in the future. BNY Mellon and Goldman Sachs have already launched tokenized MMF shares, reflecting this shift. Bank of America emphasizes that stablecoins provide a form of liquidity and high yield potential, intensifying competition against MMFs, which currently face regulatory constraints that restrict their ability to match stablecoin yields. The window for MMFs to tokenize and stay competitive is narrow as regulatory changes may soon allow stablecoins to offer yield, prompting MMFs to innovate quickly to maintain their market position.

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