Legal clarity for the use of tokenised money market funds (TMMFs) as collateral is growing across Luxembourg, Ireland and the UK, according to a report by Global Digital Finance (GDF), a global digital assets members association.
Luxembourg offers strong legal certainty for TMMFs due to established digital asset frameworks and its legal ties with the UK, while Ireland, though lacking explicit statutes, would likely treat tokenised shares in line with traditional ones under existing property law, the findings showed. In the UK, legal uncertainty around TMMFs is already low and expected to reduce further with the anticipated Property (Digital Assets etc.) Bill and evolving common law on digital assets.
The study focused on jurisdictions like Ireland and Luxembourg hosting over 80% of Europe’s money market and cross-border funds, with English law governing most Credit Support Annex arrangements.
The GDF sandbox found no legal, operational or regulatory barriers to adoption, showing that TMMFs can move beyond theory to operate as production-ready collateral instruments through six successful simulations covering manual and automated margining, portfolio substitution, insolvency recovery, triparty funding and near-instant collateral settlement.
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Firms like S&P, Federated Hermes, R3, JP Morgan, Ownera, Finastra, Lloyds Banking Group, Hogan Lovells, LSEG, Archax, Blackrock, State Street, ISDA, EY, Commerzbank, Fireblocks, Northern Trust, Apex Group, Franklin Templeton and Goldman Sachs took part in the working group.
“As a co-chair of this working group, I have been impressed with the collaborative and effective working engagement across traditional financial institutions and fintechs as well as legal and professional services contributors and their firms. The combination of research and assessment findings and the practical sandbox execution of production use cases made this working group a very special and successful achievement,” said Armin Peter, GDF executive in residence who is also a former global head of debt syndicate Emea at UBS and a, former GFMA board member.
Lawrence Wintermeyer, GDF member board chair, said: “Testing the legal certainty of digital assets and demonstrating real production use cases is a time that has arrived for the global securities industry. This outstanding working group demonstrated it could engage the world’s best TradFi and digital Financial Market Infrastructure (dMFI) firms to collaborate and demonstrate to the whole of the industry and its regulators that digital finance has truly arrived. I look forward to the US working group kicking off in January 2026.”
