Private Money Market Funds

Tokenized money market funds providing yield-bearing treasury management for institutions. Unlike stablecoins (which typically don't earn yield), money market funds are productive assets generating returns. Institutions prefer MMFs over non-yield stablecoins for treasury management but require privacy for position sizes and yield strategies.

Additional Context

Actors

Asset Managers · Institutional Investors · Banks · Custodians · Regulators · NAV Calculation Agents

Problems

Problem 1: Position and Strategy Privacy

Large MMF positions reveal treasury management strategies and cash reserves. Competitors can infer financial health and business plans from position sizes.

Requirements:

  • Must hide: Position sizes, subscription/redemption timing, yield optimization strategies
  • Public OK: Fund NAV, total AUM, portfolio composition (at aggregate level)
  • Regulator access: Investor concentration monitoring, liquidity stress testing data, SEC reporting

Constraints:

  • Daily NAV calculations
  • SEC Rule 2a-7 compliance (for US funds)
  • Liquidity requirements for redemptions
  • significant cost reduction expectations driving adoption

Problem 2: Redemption Pattern Privacy

Redemption patterns signal liquidity needs or market views. Large redemptions can trigger runs if publicly visible.

Requirements:

  • Must hide: Individual redemption requests, timing, amounts
  • Public OK: Aggregate fund flows (delayed)
  • Regulator access: Liquidity monitoring, stress scenario analysis

Constraints:

  • Same-day or T+1 redemption requirements
  • Gate and fee provisions
  • Systemic risk monitoring obligations

Recommended Approaches

Approach TBD. Consider:

  • Privacy-preserving subscription/redemption mechanisms
  • Confidential NAV sharing with authorized parties
  • Integration with custody and settlement infrastructure

Open Questions

  • How does yield attribution work with position privacy?
  • What's the relationship to stablecoin privacy patterns?
  • How to handle fund gates/fees with position privacy?

Notes And Links

  • Related: Private Stablecoins for Institutional Payments (non-yield alternative; settlement cash)
  • Related: Private Treasuries (corporate treasury use of MMFs)
  • Differentiation: Unlike stablecoins, money market funds earn yield. Institutions prefer MMFs over non-yield stablecoins for treasury management.
  • Market context: Largest RWA category outside stablecoins; significant cost reduction driving adoption