Tokenized money market funds: stablecoin yield without DeFi

Tokenized money market funds let a fintech pay a Treasury-like rate on stablecoin balances with no DeFi lending involved. A vault holds the fund tokens under the fintech's brand, which keeps the money in stablecoins around the clock and swaps DeFi protocol risk for fund issuer and redemption risk.

Many neobanks, payment companies and remittance platforms hold customer or operating balances in stablecoins and want to pay a return on them, while ruling out DeFi lending and looping because their risk committee or regulator won't accept a return that depends on lending markets. The route they end up on is tokenized short-dated government paper: Treasury bills and money market funds issued as tokens, held inside a vault that runs under the fintech's own brand. Upshift builds and operates these vaults through Vault-as-a-Service.

Tokenized money market funds at a glance

• What they are: shares in a regulated Treasury bill or government money market fund, issued as tokens that settle onchain. BlackRock's BUIDL, Franklin Templeton's BENJI and Ondo's OUSG are among the largest.
• What they hold: US government money market funds must keep at least 99.5% of assets in cash, government securities or repos backed by them.
• What they earn: roughly the short-term Treasury rate less fund fees, accruing every day including weekends. Call it a 24/7 T-bill rate.
• How a fintech offers them: a vault under the fintech's brand holds the fund tokens plus a small stablecoin buffer, and customers deposit and withdraw in USDC or USDT.
• How fast customers get out: the buffer pays normal withdrawals straight away, and larger amounts exit through the fund's redemption window or an instant oracle-priced sale.
• What risk replaces DeFi risk: the fund issuer, its transfer agent and its redemption terms, in place of lending markets and liquidations.

Why keep the balance in stablecoins

A finance team holding USDC has two ways to earn a T-bill rate on it. The first is to redeem the stablecoin for dollars, wire them to a broker or bank, buy bills or a money market fund, and reverse the whole chain when the money is needed. That means banking hours, settlement days and two conversion steps to reconcile. The second is to keep the balance in the same stablecoin and buy a tokenized fund that holds the same bills, so the position can be entered and exited onchain at any hour, including weekends.

Stablecoins pay holders nothing on their own. The US GENIUS Act bars permitted payment stablecoin issuers from paying interest or yield to holders, so the reserve income stays with the issuer (our GENIUS Act explainer covers what that leaves open). The 3-month Treasury bill yielded 4.08% on 25 September 2026, according to FRED, and a fund holding bills earns roughly that rate less its fees.

The closest everyday comparison is a corporate sweep account. At the end of each day the bank moves idle cash from the operating account into a money market fund overnight, then moves it back when payments need it. A vault holding tokenized funds does the same job for a stablecoin balance, with the difference that the sweep runs onchain and doesn't stop at 5pm on a Friday.

What "no DeFi exposure" can mean

"No DeFi" covers a range of structures, and buyers usually ask for them as a menu from lowest to higher risk. The bands below are indicative, based on current fund and T-bill rates, and every one of them floats. The Upshift yield options page shows the full menu with the live vaults in each band.

Tokenized Treasury funds are the largest and most established category. On 29 September 2026, rwa.xyz tracked $14.72 billion across 108 tokenized US Treasury products. Among the largest are BlackRock's BUIDL at $2.25 billion, Franklin Templeton's BENJI funds (about $1.72 billion in iBENJI and $664 million in BENJI) and Ondo's OUSG at $386 million. Each has its own eligibility rules, minimums and redemption terms. Government money market funds in the US must hold at least 99.5% of assets in cash, government securities or repos backed by them, per the SEC's investor bulletin.

The cash-managed pattern answers a practical problem with the first band. Most tokenized funds redeem on a business-day cycle, and some set six-figure minimum redemptions, so a payments company that needs to pay out every hour can't wait on the fund. Holding a buffer of plain stablecoin, sized to a normal day of withdrawals, lets payouts clear straight away while the rest of the balance stays in the funds.

The mid band moves up the credit curve. rwa.xyz tracked $7.94 billion in tokenized credit on 29 September 2026, including tokenized AAA CLO funds holding several hundred million dollars. The extra return pays for real credit risk and, usually, longer or less frequent redemption windows.

Removing DeFi protocols removes lending-market and liquidation risk, and it adds other risks in their place. The fintech now depends on a fund issuer and its transfer agent, on the fund's redemption schedule, and, in the mid band, on the credit quality of the underlying loans. Treasury teams already know how to assess those risks, which is much of the appeal. Our guide to tiering vault strategies by risk goes deeper on building a low, mid and high menu.

How a vault wraps tokenized funds

A fintech can buy a tokenized fund directly. A vault makes sense when the platform wants to offer the return to many customers under its own brand, mix several funds and keep a buffer. The mechanics run in five steps:

1. Deposit. Customers, or the fintech's own treasury, deposit stablecoins into a vault branded as the fintech's product. Each depositor receives vault shares, a receipt token that records their claim.
2. Allocation. The vault holds shares in one or more tokenized Treasury or money market funds, plus the stablecoin buffer. August's policy engine limits what the vault can touch by chain, protocol, token and contract function, so a mandate of "tokenized government funds only" is enforced onchain.
3. Pricing. Upshift's multi-oracle engine values every position independently of the curator, and that sets the vault's net asset value (NAV).
4. Withdrawal. A customer redeeming shares is paid from the buffer where it covers the amount. Upshift processes claimable redemptions daily, and most vaults offer instant redemption for a fee, subject to available liquidity.
5. Exit for large amounts. When a withdrawal exceeds the buffer, the vault redeems fund shares through the issuer's normal window, or sells them for USDC in one transaction through Upshift Clear, which prices tokenized assets with a live oracle and pays from an LP-funded pool. The assets Clear currently supports are listed on the redemption page.

In the diagram, the customer's stablecoin moves from the fintech app into the vault, which splits it between tokenized fund shares and a stablecoin buffer. Withdrawals come back out of the buffer the same day, while larger exits run through the fund's redemption window or an instant exit, and in every case the customer ends up holding stablecoin again.

Four ways to hold the same T-bill exposure

With a vault, the platform builds only the customer-facing layer, while NAV pricing, allocation and the redemption queue sit in the vault. Upshift's frontend runs KYC and AML checks, and vaults can be whitelisted to a single depositor where the balance is the fintech's own treasury. The breakdown of who does what in an onchain vault covers the roles, and segregated vs co-mingled vault accounts covers when a dedicated vault fits better than a shared one.

What platforms check before integrating

Fintechs run due diligence on the vault provider before any customer money moves, mostly on who can change the vault and how:

• Ownership: each vault's owner is a Gnosis Safe multisig. Automated jobs such as fee accrual are signed through Fireblocks MPC, with Fordefi used where an external party co-signs
• Parameter changes: changes such as the management fee go through a timelock configured per vault. Instant-redemption and withdrawal fees aren't timelocked
• Code upgrades: proxy upgrades sit outside the timelock and need 4 of 6 signers on the ProxyAdmin multisig, split across the asset issuer, Upshift and the curator
• Audits: the contracts have had 10 smart contract audits by 6 independent firms
• Reporting: Securitize provides independent third-party reporting on Upshift vaults at an LP's request

A vault holding tokenized funds still runs on smart contracts, so contract risk is smaller with this structure and still present. Upshift carries no protocol-level smart contract insurance, and cover can be bought from third-party providers. The controls are covered in how onchain yield vaults are secured.

Risks

• Issuer and transfer agent: each tokenized fund depends on its manager, custodian and the agent that keeps the share register
• Redemption timing: fund redemptions follow business days and cut-offs. The buffer and instant exits cover normal flows, and a very large, sudden outflow may still wait on the fund window
• Rate risk: the return follows the policy rate down when central banks cut
• Credit risk: mid-band credit funds can take losses that government funds don't
• Eligibility: many tokenized funds are open only to qualified or non-US investors, which shapes which funds a given vault can hold

Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

Can a fintech earn yield on stablecoins without using DeFi?
Yes. A vault can hold only tokenized Treasury bill and money market funds, with limits enforced onchain so it can't route into lending markets. The return tracks short-dated government rates less fees.

What rate do tokenized money market funds pay?
Roughly the short-term Treasury rate less fees. The 3-month bill yielded 4.08% on 25 September 2026 (FRED).

How fast can customers withdraw?
Withdrawals covered by the vault's stablecoin buffer pay out straight away. Larger amounts go through the fund's redemption window or an instant oracle-priced exit such as Upshift Clear, subject to liquidity.

Does the money ever convert to fiat?
No. Customers deposit and withdraw in stablecoins, and the vault holds fund tokens that settle onchain.

Keep reading

• Tokenized treasuries. The largest funds and how to exit them.
• How neobanks and fintechs offer stablecoin yield. The three business models.
• How companies earn yield on idle treasury cash. Six structures compared.
• How card programs earn yield on customer float. The PayFi version of the same idea.
• T-bill calculator. Price a bill against a tokenized fund and a vault.