A press release titled, "Morgan Stanley Investment Management Launches Stablecoin Reserves Portfolio," tells us, "Morgan Stanley Investment Management (MSIM) ... announced the launch of the Stablecoin Reserves Portfolio (MSNXX), part of the Morgan Stanley Institutional Liquidity Funds trust. The Stablecoin Reserves Portfolio is a new government money market fund designed to align with the stablecoin reserves investment requirements of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The Fund offers payment stablecoin issuers an eligible money market fund option where they can invest their required reserves that back their outstanding payment stablecoins." (See Crane Data's March 23 News, "Fidelity Files for Reserves Digital Fund, 5th Stablecoin Reserve MMF.")
Fred McMullen, Co-Head of Global Liquidity for Morgan Stanley Investment Management, comments, "We are pleased to deliver a new investment solution to the marketplace that seeks to address the needs of stablecoin issuers. The significant increase in stablecoin issuers as well as the growing number of assets held in stablecoins represents an evolving portion of the marketplace that is ripe for future growth."
The release explains, "The Stablecoin Reserves Portfolio seeks preservation of capital, daily liquidity and maximum current income, consistent with seeking to maintain a stable $1.00 net asset value (NAV). The Fund invests only in cash, U.S. Treasury bills, notes and bonds with remaining maturities of 93 days or less, as well as certain overnight repurchase agreements collateralized by U.S. Treasury securities and/or cash."
Morgan Stanley's Head of Digital Asset Strategy Amy Oldenburg, states. "Developing innovative ways to work with stablecoin issuers is another step towards modernizing the financial infrastructure and a key way to improve our institutional clients' experience. Creating opportunities for all client segments as markets evolve will make the next phase of finance possible and more broadly accessible."
The statement continues, "The Stablecoin Reserves Portfolio builds on MSIM's commitment to expanding its digital assets offerings. In April, MSIM debuted its first cryptocurrency ETP, the Morgan Stanley Bitcoin Trust (MSBT), which seeks to track the performance of bitcoin. BNY (BK), a global financial services company, provides digital asset custody services for MSBT as well as serving as the administrator and transfer agent, providing account, recordkeeping and cash management services."
It adds, "Earlier this year, MSIM introduced DAP Class shares of its Morgan Stanley Institutional Liquidity Funds Treasury Securities Portfolio. DAP Class shares are designed to participate in BNY's Money Market Funds (MMFs) mirrored record tokenization initiative. Currently, DAP Class shares are available via BNY's LiquidityDirect and Digital Asset platforms, the corresponding value of which will be represented through mirrored record tokenization on a blockchain, while BNY maintains the official books and records for the fund shares."
Finally, McMullen says, "We have actively engaged across the industry to develop the ability to offer digital asset related liquidity solutions. While still in the early stages, these recent product launches signify our commitment to develop relevant, timely solutions that may address evolving investor needs in an increasingly digital marketplace."
For more on Stablecoin Reserve funds, see these Crane Data News stories: "'Dec. MFI: MMFs Hit $8.0T, Top 10; JPM '26 Outlook; Stablecoin Reserves" (12/5/25), "'State Street Files for Stablecoin Reserves MMF; BNY's Stephanie Pierce" (11/19/25), "BNY Stablecoin Reserves Goes Live; ICI: Assets Eke Out Record $7.5T" (11/14/25),"BNY's Vince on Q3 Call: Money Market Evolution, Dreyfus, Stablecoins" (10/22/25), "BlackRock Breaks $1 Trillion in Money Funds; Offers Stablecoin Reserve" (10/17/25), "Sept. MFI: Assets Break $7.6T; Stablecoin Reserves; JPM on Offshore MFs" (9/8/25), "BNY Dreyfus to Launch Stablecoin Reserves Fund; Joins Goldman, Circle" (8/20) and "Goldman Files to Launch Stablecoin Reserves Fund; Circle Q2 Earnings" (8/13/25).
In related news, the International Monetary Fund (IMF) recently published, "Making Stablecoins Stable." It states, "Payment stablecoins are privately issued digital money with the potential to enhance payment efficiency, foster innovation, and improve financial inclusion. At the same time, they are vulnerable to runs and associated welfare losses. One way to lower run risk is to require stablecoin issuers to hold safe assets. But doing so may lower issuers' profitability and thus their incentive to provide stablecoins, hampering payment innovation and product variety."
The IMF explains, "This paper offers a theoretical framework to navigate the tradeoff between maintaining stability and incentivizing issuance. Based on the Diamond and Dybvig (1983) model of bank runs, the paper shows that an unregulated private equilibrium is suboptimal. Stablecoin issuers hold risky assets to maximize profits, increasing run risk. A social planner can improve the equilibrium by requiring the backing of stablecoins with a safe asset (such as central bank reserves in a narrow bank setting), and creating conditions for other sources of revenue for issuers (such as central bank reserves remuneration or policies for payment data utilization). The model offers a baseline for the ongoing policy discussion while identifying considerations for further study."
It tells us, "Stablecoins have emerged to the forefront of policy discussions. Stablecoins are crypto assets purported to maintain a stable value typically relative to a national currency like the U.S. dollar. The enactment of the U.S. Genius Act in July 2025 marked a turning point for stablecoins, providing a legal foundation for issuance and regulation in the U.S. and positioning stablecoins more prominently in the global discussion. Prior to this, the popularity of stablecoins had fluctuated, reaching a peak following Facebook's 2018 Libra announcement and a trough around the bankruptcy of Terra Luna, a popular stablecoin, in 2022. Parallel regulatory developments contributed to the evolution of the policy landscape. These include the European MiCa Regulation in 2023, the Monetary Authority of Singapore's acknowledgement that regulated stablecoins could serve as a potentially acceptable form of money for financial transactions, and further developments of legal and regulatory frameworks in Japan and the United Kingdom."
The paper adds, "Stablecoins promise to bring significant benefits. These are discussed widely, including in IMF (2025). They include faster, cheaper, and more accessible payments within and across borders. Stablecoin payments can be made around the clock by anyone with access to a global blockchain.... But stablecoins also come with notable risks. These are also discussed in IMF (2025). Many pertain to operational stability, financial integrity, the protection of user funds, and contagion to other financial institutions, especially banks. Many of these risks are being addressed to different extents by nascent laws and regulations. Risks to macro-financial stability also arise." (See also, the Financial Times' "How worried should Wall St be about the stablecoin threat to deposits?")
