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Twenty years ago, Prime Money Market Fund (PMMF) assets were equivalent to 11.9% of U.S. GDP.
Today, following a decade of scapegoating and regulation, they are down to a miniscule 2.3%. Commercial paper, upon which companies rely for short term working capital and are a primary holding of PMMFs, has decreased by two thirds over the same period.

Trends in UK and Eurozone are similar. 

The Carfang Group took the President's Working Group's call for further PMMF regulation to task in comments to the SEC on the topic last month.

Enter STABLECOINS. These cryptocurrencies, like PMMFs, attempt to maintain a stable 1.0000 market price in specific currencies. Some, also like PMMFs, invest in money market instruments in order to achieve to achieve the parity. Others use market operations, buying and selling, to maintain parity.

The 54 USD stablecoins that we watch at The Carfang Group have a total market cap of $112B which is already 20% of the PMMF total market cap.

Tether is an example of the first type. It claims to be managing a $63 billion portfolio of government securities and commercial paper to achieve its peg. Tether claims to hold 49% of its portfolio in commercial paper. At $63B, Tether would be the 4th largest PMMF, ahead of many household names.

TITAN is an example of the second type. Two weeks ago, its market operations backfired. The coin lost over 99% of its value.

In PMMFs, shares are redeemed directly from the fund company when an investor seeking liquidity sales shares. In coins like Tether, investors are free to trade their coins with others. This takes a lot of liquidity pressure off the portfolio. Essentially, their structure leads to a much longer WAM, which could be a key to stability.

Stablecoins, at least for now, have escaped the tight regulations to which PMMFs are subjected. But they sure do walk like ducks.