A new class of digital money is reshaping how Americans move and store dollars — and Wall Street is racing to get a piece of it.
ProShares is launching what it says is the first money market ETF designed to hold reserves for stablecoin issuers, entering a market whose size is still being decided in Washington.
The ProShares GENIUS Money Market ETF, which begins trading Thursday under the ticker IQMM, invests in short-term US government securities that qualify as eligible reserves under the GENIUS Act, the stablecoin law signed by President Donald Trump last year. Stablecoins are digital tokens pegged to fiat currencies and are used to move money across crypto networks.
Under the new law, every dollar of stablecoins in circulation must be backed by an equivalent dollar held in safe, liquid assets like Treasury bills.
How large that market becomes is now at the center of a lobbying war between banks and the crypto industry over how far stablecoins should be allowed to compete with traditional bank accounts. Banks have warned that a fast-growing stablecoin market could pull trillions of dollars out of the deposit system. Crypto firms say banks are trying to protect their turf.
US Treasury Secretary Scott Bessent has estimated the legislation could help expand the dollar-backed stablecoin market to $3 trillion by 2030. Treasury is still writing the rules that will shape how that plays out.
IQMM holdings include short-term US government securities maturing within 93 days — the same limit the GENIUS Act sets for stablecoin issuers. What makes it novel is the customer it’s targeting: stablecoin issuers that need somewhere to park their legally required reserves. ProShares has structured the fund to match the exact maturity and liquidity specifications the law demands, positioning it as a ready-made option for issuers managing their reserve portfolios.
Investors have poured money into money market funds in recent years, drawn by the Federal Reserve’s aggressive rate-hiking cycle. Assets have risen to a record at the start of the year, even as the Fed has begun to ease. For stablecoin issuers required to hold compliant reserves, funds like IQMM represent a ready-made solution, especially if the market they serve continues to expand.
The convergence of the stablecoin and money market ETF worlds comes at an opportune moment, according to ProShares CEO Michael Sapir. He said the fund is structured to take a more conservative approach to cash management than traditional money market requirements demand — all within the convenience of an ETF wrapper — positioning it as a compelling option for institutional investors, including stablecoin treasury managers.
“History shows that investors gravitate toward vehicles that offer transparency, efficiency and liquidity,” he said. “We believe money market ETFs are positioned to benefit from that shift.”
ProShares manages more than $95 billion in assets.
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Isabelle Lee
