Major Banks and Firms Complete Largest Ever Tokenized MMF Sandbox
By Dominic Sow · 4 November 2025
Global Digital Finance (GDF), the leading global digital assets members association, announced the results of a working group reporting on the legal certainty of collateral eligibility and the mobility of Tokenized Money Market Funds (TMMF) in Luxembourg, Ireland, and the UK. Ireland and Luxembourg host more than 80% of the MMFs and cross-border funds in Europe and English law governs the Credit Support Annex (CSA).
The report concludes:
- There is relative legal certainty of TMMFs located in Luxembourg in a digitally native or registered form due to the availability of statutory frameworks to govern such transactions
- Longstanding historical legal interaction between Luxembourg and the UK in respect of financial and investment contractual arrangements, including CSAs, also makes this an attractive place to establish a TMMF where the tokens will be posted as collateral under a CSA governed by English law
- There is not yet express statutory or judicial authority in Ireland specifically addressing tokenized shares or TMMFs. Legal certainty in respect of ownership and treatment of tokenized shares under Irish law therefore requires an analogy to traditional shares and electronic contracts, rather than being directly established
- It is reasonable to conclude that Irish courts would treat digitally native TMMF shares in a manner consistent with traditional shares. This alignment reinforces the view that TMMF shares can be accommodated within existing property law principles in Ireland, supporting their recognition and enforceability under Irish legal standards
- Where an MMF is tokenized using a digitally native TMMF and is located in the UK, there is a low degree of legal uncertainty concerning the legal treatment of ownership and a similarly low level of uncertainty concerning the replication of rights for market participants between the traditional MMF and a digitally native TMMF
- It is anticipated that further certainty will be available in the UK if the Property (Digital Assets etc.) Bill is enacted and common law precedent is developed as to the implications of the “third category” of property.
Over 70 firms participated in the working group including 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.
“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.
Sharon Lewis, Lead Partner for Future of Finance and Co-Chair of Digital Asset & Blockchain Practice, Hogan Lovells said: "There is relative legal certainty of TMMFs located in Luxembourg in a digitally native or registered form, where both Ireland and the UK have a low degree of uncertainty as the courts are likely to treat digitally native TMMF shares in a manner consistent with traditional shares. The cross discipline collaboration involved in this work has been outstanding and it is a credit to the industry participants."
As part of the working group 30 of the firms participated in the GDF Industry Sandbox, powered by Ownera, the firm which operates the FinP2P routers that implement the open FinP2P standard to “prove” the production use case for collateral mobility in TMMFs.
With no fundamental barriers identified across legal, operational and regulatory dimensions, the sandbox demonstrated that TMMFs can transition from theoretical use cases to a production-ready collateral instrument across six simulations:
- Simulation 1: Simple Bilateral Transfer – Manual Margining of TMMFs
- Simulation 2: Integrated Margin Calls – Automated Posting via Third-Party Systems
- Simulation 3: Depeg Event and Substitution – Dynamic Portfolio Management
- Simulation 4: Default Scenario – Enforcement and Recovery in Insolvency
- Simulation 5: Funding of TMMF in Triparty
- Simulation 6: From SWIFT to Collateral Settlement in Seconds.
“Hosting the GDF Industry Sandbox was a monumental collaborative effort, bringing together some of the best-in-class market participants, custodians, and technology providers from across the industry. The results highlight what’s truly possible when we apply FinP2P and its DLT interoperability layer to collateral mobility and optimization,” said Natasha Benson COO and CFO of Ownera.
Amarjit Singh, UK Digital Assets Leader, EY said: "The over 30 TradFi and Fintech firms participating in the sandbox have demonstrated that collateral mobility for TMMFs has arrived. This is an exciting next step in the continued uplift to the future market’s infrastructure, leveraging digital assets to bring real-world benefit to investors and financial institutions around the globe.”
Lawrence Wintermeyer, GDF Member Board Chair added: “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.” Companies in this story: Global Digital Finance
People in this story: Lawrence Wintermeyer