The Cash Behind the Coin

Fidelity launched the Fidelity Reserves Digital Fund (ticker FYMXX) in mid-June, a government money market fund built so stablecoin issuers can park the assets that back their tokens. It holds US Treasuries maturing in 93 days or less, cash and Treasury-backed repos, with a $1.00 target NAV and a 0.18% expense ratio. It is the fifth such product in a matter of weeks, following State Street (which launched June 8 with about $121 million and Anchorage Digital among its seed investors), BlackRock, Goldman Sachs and BNY. The GENIUS Act created the category by requiring payment stablecoins to be backed by cash and short-term Treasuries, and State Street puts the prize at $1.9 trillion to $4 trillion of reserves by 2030. The prize is the float behind the coin, not the coin itself. Source.

The Bank of England scrapped its plan to cap how much sterling stablecoin any one person (£20,000) or business (£10 million) could hold, after pushback from industry and a House of Lords committee. In its place sits a temporary issuance cap of £40 billion (about $50 billion) per systemic sterling stablecoin. It also cut the share of reserves issuers must keep in non-interest-bearing accounts at the central bank from 40% to 30%, letting them hold up to 70% in short-term gilts and earn the yield. Issuers must still redeem at par within 24 hours, self-custody is banned for systemic coins, and USDT and USDC stay under the FCA. The regime is still tighter than the GENIUS Act or MiCA, and remains the only one to cap issuance of a stablecoin denominated in its own currency. Consultation closes September 22, with sterling coins expected to go live in 2027. Source.

Baillie Gifford, the 118-year-old Edinburgh manager with about $237 billion under management, launched the Baillie Gifford Enhanced Yield Fund (BAGEY) with BNY: a dollar-denominated, actively managed short-duration corporate bond fund targeting around 7% yield. The structure is the story. Most tokenized funds wrap an existing fund and place a token on top; BAGEY is issued natively on Ethereum and Solana, with the blockchain as the legal register of record, so investors own the fund directly and ownership moves when the token moves. BNY provides the tokenization and wallet infrastructure, NatWest is depositary, and the fund settles in USDC (issued by Circle, in which Baillie Gifford is itself an investor). It is structured as a UK-regulated OEIC, open to eligible professional investors in the UK, Switzerland and the Cayman Islands, with a $100 minimum. Source.

Five senior researchers who left the Ethereum Foundation, among them Ansgar Dietrichs and Barnabé Monnot, launched Ethlabs, an independent nonprofit research lab built to ready Ethereum for institutional use: faster settlement, native issuance, cross-chain movement and more mainnet capacity. The funding is the eye-catching part. It comes from the two largest corporate ETH treasuries, Bitmine and Sharplink, alongside Ethereum co-founder Joe Lubin, plus Anchorage, Octant and SNZ. To keep the work independent from backers who hold enormous amounts of ETH, grants run through an external administrator with quarterly reporting and an annual audit, and funders do not set the research agenda. It reads as a direct answer to a year of EF departures, and as a bet that core protocol research no longer needs to live inside one central foundation. Whether that independence holds when your funders are also your largest token holders is the open question. Source.

Anchorage Digital, the federally chartered crypto bank, launched a platform to help banks issue and manage tokenized deposits with round-the-clock settlement, without ripping out their core systems. It sits in the same lane as the multi-bank deposit efforts taking shape this year, but aimed at handing individual banks the rails rather than running a shared network. CEO Nathan McCauley said the banks Anchorage is starting to work with are actively weighing how to do tokenized deposits. The pitch, as ever, is that banks would rather upgrade the dollars they already issue than cede the ground to stablecoins. Source.

MoonPay acquired Entendre, which builds AI agents that automate accounting, reconciliation and treasury work for stablecoin and fintech companies, with customers including Polygon Labs, Thirdweb and Brale. The reasoning: stablecoins make a business global from day one, and the finance team is left stitching together blockchain explorers, fintech dashboards and ledgers by hand. Entendre's agents push monthly closes toward daily ones, and the platform plugs into NetSuite, QuickBooks, Ramp, Stripe and MCP servers. It is a small deal that points somewhere big: the agent layer is moving from moving money to running the finance operations behind it. Announced June 22. Source.

US crypto market-structure legislation has cleared every procedural step and sits on the Senate calendar, eligible for a floor vote. On June 18, the chair of the House Agriculture digital-assets subcommittee signaled the House would move quickly to pass it if the Senate acts before the August recess. What is left is arithmetic: the bill needs 60 votes, Republicans hold around 53 seats, and only two Democrats are on record supporting it, leaving a gap of at least five to seven votes to find before lawmakers leave. The sticking point is no longer stablecoin yield but ethics language around officials profiting from crypto. Miss the August window and the bill risks sliding into a far less certain 2027. Source.

Most tokenization so far has been a costume. This week something underneath it moved.

When BlackRock's BUIDL or Franklin's BENJI put a fund onchain, the token is a mirror. The real share still sits with a transfer agent, and the chain is a second copy that has to be reconciled with the first. Baillie Gifford's BAGEY drops the mirror: the token is the share, and the chain is the legal register of record, so when the token moves, ownership moves with it. That is a smaller and more boring claim than "tokenize everything," and a more useful one, because it closes the reconciliation seam where a lot of onchain-finance risk actually hides. I think native issuance over wrappers is the line worth watching for the rest of the year. What I don't know is whether the secondary market shows up. A fund whose register is a public chain is only as good as the liquidity and the redemption path around it, and a $100 minimum on a professional-only product is a long way from proving that.

From Stablecoins to Tokenized Deposits: Building Institutional Rails Onchain (SCB 10X).

A 30-minute session on the exact progression this issue keeps circling: how on-chain money moves from stablecoins to tokenized deposits, and what it takes to build bank-grade settlement rails on public chains. A useful companion to the reserve-fund race and the Anchorage and Baillie Gifford launches above. Watch it here.

That’s it for this week.

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James Smith & David Walsh