How do tokenized money markets work?

A tokenized money/fund is also known as a digital fund or a blockchain-traded fund. Here, the shares in the fund are digitally represented and are traded and recorded on a blockchain network. This money market leverages computer codes to work as a traditional fund and replaces shares with blockchain tokens.

A tokenized fund isn’t a form of uncertificated security documented by the fund itself but by the underlying blockchain technology. Therefore, there is little difference between investing in a fund and owning the tokens representing its shares. But the costs of maintaining investor registers are significantly minimized when tokens represent ownership.

The tokenization of a money market doesn’t alter its valuation. The Net Asset Value (NAV) still determines a fund’s valuation. Additionally, a blockchain maintains a distributed and immutable record of the issued tokens and transactions instead of a central shareholder register.