Tokenized short-term funds, a new type of digital financial products that combine traditional and decentralized finance, have surged to $5.7 billion in assets since 2021, as per a recent Moody’s report. The report highlights the increasing interest from conventional asset managers, insurers, and brokerages in providing clients with access to both fiat and digital markets. These funds, usually backed by low-risk assets like US Treasurys, function similarly to traditional money market funds but leverage blockchain for issuing and managing fractional shares, allowing for instant settlement. Moody’s suggests potential use cases for tokenized funds such as yield optimization for institutional investors, liquidity management for insurance firms, and collateral in trading and lending activities. Despite the growth, challenges like blockchain-related vulnerabilities and regulatory uncertainties persist in this evolving sector. Read more AI-generated news on: https://app.chaingpt.org/news