Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

GENIUS Act Compliant Money Market ETF IQMM

edited February 21 in Fund Discussions
This new ProShares money-market ETF IQMM (ER 15 bps) meets special requirements for holding assets that back stablecoins under the GENIUS Act (T-Bills/Notes up to 93-day maturity, etc). It's also being used by ProShares for holding cash for its other ETFs. So, it had a phenomenal growth in assets at launch.

Money-market mutual funds meeting the GENIUS ACT requirement include FDLXX, SNSXX / SUTXX, STBXX, TFFXX, WGTXX.

Note that GENIUS Act requires T-Bills/Notes with under 93-day maturity (under 3-months) instead of average maturity or duration criteria allowed by SEC & followed by fund firms.

https://finance.yahoo.com/news/proshares-17-billion-etf-launch-131341365.html

Comments

  • From SEC:
    Today, the Division of Investment Management issued an exemptive order for WisdomTree Treasury Money Market Digital Fund to permit investors to trade the MMF's shares at $1 with a dealer on an intraday basis, regardless of its end-of-day NAV.
    https://x.com/SECGov/status/2026043887899361418
    https://www.sec.gov/files/rules/ic/2026/ic-35968.pdf
  • OK, this is all above my pay grade. Are there any legitimate concerns regarding SNSXX / SUTXX? We have significant holdings in both of those MMKT funds.
  • edited February 23
    Old_Joe said:

    OK, this is all above my pay grade. Are there any legitimate concerns regarding SNSXX / SUTXX? We have significant holdings in both of those MMKT funds.

    Nothing wrong at all. It's a regular Treasury-only m-mkt fund that can also be used by crypto stablecoin issuers to hold reserves. When GENIUS Act was written, Congress may not have intended to create another flavor of m-mkt funds (3 existed already after 2014/16*), but that's what is happening and now we have a 4th - GENIUS compliant m-mkt funds.

    *Government, Prime, Institutional-Prime.
  • Thanks much, Yogi !
  • edited February 23
    "Congress may not have intended to create another flavor of m-mkt funds (3 existed already after 2014/16*),
    but that's what is happening and now we have a 4th - GENIUS compliant m-mkt funds."


    I guess we can be thankful that we have an abundance of geniuses in Congress!
  • edited February 23
    @yogibearbull-

    • If I were to use some amount of existing SUTXX holdings within Schwab to buy shares of the IQMM ETF, would that in essence allow me to sell IQMM shares at anytime in the trading day, and then immediately transfer the sales proceeds within Schwab to, for instance, the Schwab checking account? In other words, to assign a portion of the existing Schwab holdings to an asset which does not need to wait until the following day to use for some other purpose?

    • Will IQMM pay any sort of dividend like SUTTX does, or is income strictly from hoped-for price gain?

    (Thanks- I hope that I'm being sort of clear on this.)
  • edited February 23
    Hi @Old_Joe
    Below is a quasi AI view of the GENIUS act. I cannot verify the info presented, and assume the information to be accurate.

    ---The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed into law in July 2025, mandates that money market funds (MMFs) used as stablecoin reserves must adhere to strict liquidity and asset-quality standards to mitigate systemic risk. While these regulations aim to stabilize the digital asset ecosystem, they introduce specific risks for investors and institutions in 2026.

    Primary Investment Risks

    Yield Compression: Because the Act restricts reserves to low-risk, highly liquid assets like short-term U.S. Treasuries (maturities of 93 days or less), Genius-compliant MMFs may offer significantly lower yields than traditional money market funds with broader mandates.

    Liquidity and Redemption Stress: During periods of high market volatility, stablecoin issuers may face rapid, large-scale redemption requests. This could force the underlying MMFs to liquidate assets quickly, potentially leading to depegging events or a failure to maintain a stable $1.00 net asset value (NAV).

    No Government Guarantee: An investment in a Genius-compliant money market fund is not a bank account and is not insured by the FDIC or any other government agency. There is no requirement for fund advisers to reimburse losses during periods of market stress.

    Structural and Systemic Risks

    Reserve Quality Concerns: Critics argue the Act's permissible reserves—which include uninsured bank deposits and repurchase agreements—are still prone to "runs" and could create a "systemic shock vector" if a stablecoin failure cascades into the traditional banking sector.

    Regulatory Uncertainty: As of February 2026, many specific capital and liquidity requirements are still in the notice-and-comment rulemaking phase, with final implementation expected by January 18, 2027. This "rulemaking gap" creates operational uncertainty for early adopters.

    Concentration Risk: The payment system's network effects may lead to a few large stablecoin issuers dominating the market, potentially concentrating financial stability risks within a small number of massive reserve-holding MMFs.

    Summary of Permissible Reserve Assets
    Under the Act, MMFs serving as reserves must invest exclusively in:
    U.S. Currency and Federal Reserve Bank balances.
    U.S. Treasury Bills with a remaining maturity of 93 days or less.
    Overnight Repurchase Agreements backed by short-term Treasuries.
    Insured Demand Deposits at depository institutions.

    This LINK is another source.

    The above link is Google. I know you don't use Google, but can use DUCK with the words Genius Act Risks for your search with many other links.

    Remain curious,
    Catch
  • Damned good advice, @Catch22. Thanks much.
  • I checked after login that IQMM is NOT supported at Fido and Schwab.

    On web search, I found that Fido and Schwab BLOCK competing m-mkt funds (OEFs or ETFs) on their platforms. They want customers to use firm's m-mkt funds.

    But IQMM may be available at other brokerages.
  • msf
    edited February 24
    Vanguard, though it blocks leveraged funds (e.g. DUSL) and non-house OEF MMFs (its house funds are some of the best on the market), does sell IQMM.

    Merrill, though it sells non-house OEF MMFs, blocks ETF MMFs, even government funds like GMMF. Who'd have thunk Merrill would be more of a nanny than Vanguard?
    Trading of this security is generally not permitted on the Merrill platform as it carries unique risks, as further described in the prospectus. Merrill maintains a Block List for certain Exchanged Traded products and this has been identified as one of them. This order has potential for volatile performance and/or significant tracking error and may have higher expense ratios, lower liquidity or higher risk of fund closure than other similar funds in the same peer group.
    E*Trade sells third party OEF MMFs and appears to offer nine ETF MMFs including IQMM. Here's their ETF screener; enter Money Market for Morningstar Asset class.
    https://www.etrade.wallst.com/research/Screener/ETF?isIframe=false

    TIAA sells a slew of OEF MMFs (several NTF, most w/TF) but offers no ETF MMFs. This appears to be a business decision, not one of "protecting" investors. It does sell DUSL (Dow 3x).

    A threshold question is why you are interested in this, or any, GENIUS Act MMF. As yogi wrote, as Google AI reported, and as stated in its prospectus:
    because the Fund intends to operate as a permissible reserve investment for payment stablecoin issuers under the GENIUS Act and is therefore subject to related investment restrictions, the Fund’s yield may be lower than other money market funds that are permitted to invest in a wider universe of securities.
    The fund is a government MMF (already the safest) but with even shorter maturities. That might sound like a better, super super safe fund, but because it is designed for use as stablecoin reserves, its customer profile is skewed and that adds to risk.
Sign In or Register to comment.