Morgan Stanley launches a stablecoin reserve fund, positioning itself as a reserve manager in the stablecoin industry

According to ChainCatcher, investment banking giant Morgan Stanley’s asset management arm, MSIM, has announced the launch of the Stablecoin Reserve Portfolio Fund (MSNXX), a government money market fund specifically designed for stablecoin issuers. Its purpose is to provide a regulated and secure place to hold reserves that back the tokenized fiat versions issued by these issuers.

The fund invests only in the safest and most liquid instruments, such as US Treasury bills (short-term loans to the US government) and repurchase agreements (overnight loans collateralized with government securities of the same kind), both targeting principal protection. The fund’s target net asset value is $1, meaning the amount invested remains the same upon redemption, allowing holders to avoid price volatility. Additionally, the fund provides daily liquidity, enabling investors to redeem their funds on any business day without waiting periods or penalties.

Currently, the stablecoin market capitalization has reached $316 billion, with the majority held by dollar-pegged tokens such as Tether and USDC. Morgan Stanley’s fund launch comes as the “GENIUS Act” advances in Congress. If passed, the bill would legally require stablecoin issuers to back their tokens with high-quality liquid assets such as Treasury bills and cash equivalents, and hold them through regulated instruments. The fund is thus positioned to take on reserves management business ahead of any regulatory mandate becoming law.

In addition, Morgan Stanley Investment Management recently launched the Morgan Stanley Bitcoin Trust (MSBT), a cryptocurrency ETP tracking Bitcoin, with custody and fund management services provided by BNY Mellon. It also partnered with BNY Mellon to issue tokenized DAP shares of its Institutional Liquidity Funds Treasury securities portfolio, creating blockchain-based mirror records while official bookkeeping is maintained by BNY Mellon.