Tokenized Funds See 350% Growth Amid Risks, Says Moody’s Report

Moody's Ratings highlights risks in the booming tokenization of funds, despite their rapid growth.

Tokenized money market funds increased 350% in a year, reaching a market cap of $5.2 billion.
Major financial institutions like BlackRock and Franklin Templeton are leading in this sector.
Investors must consider benefits like accessibility against risks such as technology vulnerabilities and regulatory changes.
Limited experience among fund managers can lead to key-man risk, affecting fund stability.
Smart contracts may enhance efficiency but are vulnerable to coding flaws and attacks.
Redemption mechanisms should allow for both stablecoin and fiat to mitigate risks from depegs or outages.
Legal complexities arise due to differing regulations across jurisdictions, impacting investor claims.

Moody's recommends enhanced risk management and rigorous audits to address these challenges.