ProShares announced the launch of the ProShares GENIUS Money Market ETF (IQMM), the first money market ETF to meet the GENIUS Act requirements, making it eligible for investment for stablecoin reserves. IQMM provides a flexible, transparent option for investors seeking a high-quality cash management solution. The fund invests exclusively in short-term U.S. Treasuries with a focus on principal preservation and stability.
ProShares CEO Michael Sapir comments, “IQMM reflects ProShares’ continued commitment to building innovative products for evolving markets.” The release adds, “IQMM combines intra-day trading and weekly distributions in a low-cost ETF structure.” For individual investors, IQMM may offer higher income potential than bank deposits or holding cash.
For institutions and stablecoin providers, the Fund’s dual Net Asset Value (NAV) and same-day settlement features may offer increased flexibility in managing reserve or treasury assets. The Federal Reserve Bank of New York recently published a staff report titled, “Stablecoins vs. Tokenized Deposits: The Narrow Banking Debate Revisited.” They write, “We study how the type of money used in blockchain-based trade affects interest rates, investment, and welfare.”
The piece explains, “If regulatory costs are large and risk-shifting is limited, we show that allowing only tokenized deposits to be used in crypto trade raises welfare by expanding bank credit.” If regulation is lighter and the risk-shifting incentive is strong, in contrast, allowing only stablecoins is desirable despite crowding out credit. In between these cases, allowing stablecoins and tokenized deposits to compete is optimal. The tradeoffs between these policies are reminiscent of both historical and recent debates over the desirability of narrow banking.
The Introduction says, “As blockchain-based economic activity has developed in recent years, demand has grown for a blockchain-native or ‘tokenized’ form of money denominated in a traditional unit of account, especially the U.S. dollar.” A number of so-called stablecoins have emerged to play this role, and the market capitalization of these stablecoins exceeded $300 billion in November 2025. The rise of this new form of money has sparked a debate about how it should be created. What type of entities should issue tokenized money, and what assets should back their liabilities? We examine these questions using a dynamic general equilibrium model of money and exchange that highlights similarities between this current policy issue and historical debates in money and banking.
Leave a Reply