Why now?
Banking deposits in the EU held by non-financial corporates and financial institutions represent roughly €7 trillion in underutilised assets.
In a positive interest rate environment, idle cash carries a real opportunity cost: non-financial corporates earn an average of about 1.2% on €3 trillion non-operational and term deposits today, compared to approximately 2% achievable through tMMFs, which offer equivalent liquidity and near-instant settlement. This is not a speculative scenario. A French fintech founded in 2023 grew to €1.4 billion in AuM today, with 92% of it from corporations.
Luxembourg’s unique position
Franklin Templeton, Amundi or BNP Paribas have already domiciled their European tMMFs in Luxembourg.
The reason is structural: a technology-neutral legal framework, with a pragmatic regulator that takes an enabling stance — most recently with a February 2026 update to its UCITS FAQ permitting the cash leg to be settled via e-money tokens.
The Blockchain Laws, while not yet widely used by investment funds in practice, signal legislative intent and provide a ready-made legal infrastructure. The ETF market is instructive: Ireland built an 80% share through early mover advantage, creating a flywheel never reversed.
The Luxembourg window for tMMFs is open — and the regulator intends to keep it that way.
What this means in practice
For asset managers and asset servicers, the question is no longer whether to act but how. End-to-end tokenisation gives asset managers access to a new pool of capital — bank deposits. For asset servicers, the stakes go further: it automates subscription, redemption, reconciliation and record-keeping on-chain, driving efficiency gains that fundamentally disrupt the economics of middle- and back-office servicing. But defining the right business strategy is a vital first step. The aforementioned French fintech’s lesson is clear: it led with a value proposition — “put your idle cash to work” — not a technology pitch like larger incum- bents. €1.4 billion in AuM in under two years says enough. The firms that move first with a clearly defined strategy — not a technology bet — will set the terms for everyone else.