The scope of tokenized money market fund allowlists and shared wallet IDs

The UK Financial Conduct Authority (FCA) policy statement on fund tokenization (PS26/7), which took effect on April 30, 2026, listed allowlists as one way of controlling token transfers. Under this approach, tokens are transferred only to accounts that the fund manager has verified as belonging to eligible investors. It applies to UK authorised funds generally. A report published five months earlier by researchers at the Bank for International Settlements (BIS) summarized that allowlists for tokenized money market funds constrain only direct holdings. The use of these funds as reserve assets for stablecoins (assets an issuer holds to meet redemptions) is left to a separate article. This article examines how far those lists reach.

Wallet addresses and eligibility, two things an allowlist checks

According to the report, shares in tokenized money market funds are legally securities and are subject to supervision by securities authorities. Tokens therefore must not move freely between unverified wallets, and investors go through the fund administrator's onboarding process. The result is a list of wallets that meet anti-money laundering and countering the financing of terrorism (AML/CFT) rules and fund-specific requirements, which the fund administrator maintains and updates.

The list is enforced in code through a token standard. The report cited ERC-3643 as an Ethereum token standard that further develops ERC-1400, which supports permissioned transfers. Before a transfer, this standard checks whether the recipient is in the registry of permitted investors (isVerified) and whether other conditions are met (canTransfer). However, the standard document also includes a forced transfer function that allows an agent to move tokens while skipping the check of other conditions. The list works at the level of wallet addresses, and each fund keeps its own.

Three things an allowlist does not see

Read together, the report and the FCA policy statement point to three areas that the list does not see.

Multiple wallets held by the same person. A single investor can hold units through several wallets with different addresses. For this reason, the FCA policy statement required arrangements that aggregate on-chain information at the level of the investor.

Holdings outside the list. Fund tokens can be packaged into other tokens, for example as reserve assets of more widely circulated stablecoins. Some platforms open trading to all investors they have onboarded, extending access to wallets that the fund has not put on its list directly. The report noted that these two routes can in practice circumvent the allowlist. An April 2026 analysis by the European Central Bank (ECB) also pointed out that platform trading widens access beyond the fund's list.

Links between funds. Lists are kept separately for each fund and are not connected to one another. The report identified four operational problems with this approach. Each fund must maintain its own list, which creates duplication and is impractical for funds with many investors. The approach can also constrain liquidity, limiting wider use as margin, and reduce market efficiency by dividing the blockchain into controlled and uncontrolled compartments.

Four wallets and ten funds, two layers of holding concentration

The list cannot see beyond itself, but public blockchain records show how much each wallet holds. The first layer is concentration within funds. Based on the 36 funds tallied in the report, the market grew more than tenfold, from about USD 770 million at the end of 2023 to almost USD 9 billion at the end of October 2025. Yet blockchain data show that for both BlackRock's BUIDL, the largest fund at the time the report was written, and WisdomTree's WTGXX, another large fund, about 90% of holdings sat in four wallets. The top wallet addresses of the two funds are different.

The report stated that the main investors in BUIDL are operators of decentralized finance (DeFi) protocols. These investors use the tokens in several ways, one of which is as collateral, depositing fund tokens to borrow stablecoins. This demand concentrates holdings in a few hands, and trading is not active. The summary at the start of the report characterized tokenized money market funds as a fast-growing collateral asset and savings instrument.

The second layer is concentration across funds. By the ECB's count, the ten largest funds worldwide account for more than 90% of total market capitalization. The ECB excluded some similar products from its sample, so its basis for counting differs from the report's.

The concept of wallet IDs shared across funds

The report noted that alternatives may be needed as the market grows. It took the view that a trusted wallet ID system, shared across funds and supported by AML/CFT checks and ongoing compliance monitoring, could reduce the risks. It did not name any specific technology or company.

The example the report cited is another report by BIS researchers (August 2025). That report proposed assigning an AML compliance score based on the source of funds, assessed from transaction history, and referring to that score at the points where virtual assets exit into the banking system. Under that proposal, authorities set the threshold for the score according to conditions in their jurisdiction, and the strictest form is to accept only tokens that have moved solely between allowlisted wallets that have completed know-your-customer (KYC) checks.

The ERC-3643 specification places one identity registry on each token, while allowing a single investor list storage to be linked to several registries so that the same list can be used across tokens.

Criteria for a shared wallet ID system

First, the party that operates it and bears responsibility. At present, each fund administrator manages its own list. If lists are shared across funds, it must first be decided who handles additions and removals and who is responsible for errors.

Second, the unit of sharing. The scope of identity information that must be protected differs depending on whether what is shared is wallet addresses, information aggregated at the investor level, or the results of eligibility determinations.

Third, a boundary that covers holdings outside the list. The question is whether the system must reach holdings packaged in other tokens and trading within platforms, or whether checks at the points of exit into the banking system can serve instead.

Fourth, standards across jurisdictions. The report took the view that, because regulatory frameworks are fragmented across jurisdictions, the risks of regulatory arbitrage and the difficulties of AML/CFT compliance could grow without agreed standards. In Korea, the amended Act on Electronic Registration of Stocks and Bonds, which allows distributed ledgers to be used as securities account registers, is scheduled to take effect on February 4, 2027. Standards for aligning domestic account registers with the wallet lists of overseas funds remain an open task.

Allowlists are already a control measure included in the FCA policy statement. What remains is to decide under whose responsibility, and at what level, the lists each fund has built separately should be connected. That answer needs to be settled by fund managers, platforms and authorities at the same table.