Money market funds vs stablecoin yield
An honest comparison of yield, liquidity and risk, including the cases where a money market fund is the better answer.
Rate grid as of September 2026 · USD or USDC · KYB required
The short version
- A money market fund (MMF), not a checking account, is the right benchmark for this product. For most of your cash it stays the right answer.
- Compare net against net: a fund quotes the 7-day yield of one share class, after that class’s expenses and before tax.
- Coinstancy Pro pays 6.00% annual percentage yield (APY) with no lock and up to 6.75% at twelve months, with withdrawals available within 48 hours.
- The fund settles same day or T+1 (the next business day), and carries a regulated wrapper we do not replicate. This product is not FDIC insured.
- Decide per bucket of cash, not per product. Most treasuries end up on more than one row of the decision table.
How a money market fund works.
This is the instrument a finance director actually compares us against, not a checking account. It is a good product, and knowing exactly what it does is the only way to judge whether anything should sit beside it.
Short-dated, high-quality paper: Treasury bills, repurchase agreements collateralised by government securities, agency discount notes and, in prime funds, bank certificates of deposit and commercial paper. Weighted average maturity is measured in weeks, not years.
The fund passes through what those instruments pay, minus its expense ratio. There is no leverage and no promotional subsidy. When the short end of the curve moves, the fund’s yield follows it within weeks.
Government and retail funds are managed to a stable $1.00 net asset value (NAV). Institutional prime and municipal funds carry a floating NAV. Under Securities and Exchange Commission (SEC) Rule 2a-7, as amended by the July 2023 reforms, they must apply a liquidity fee when daily net redemptions cross the threshold set by the rule.
A registered fund, a prospectus, an independent custodian, an auditor, daily portfolio disclosure and a regulator. That wrapper is a real part of what you are buying, and it is the part we do not replicate.
Money market fund. A registered fund holding short-dated paper. Not a deposit, not FDIC insured. The yield floats daily.
Money market account. A bank deposit product with a rate the bank sets, insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per insured bank, per ownership category. Different animal, usually a lower rate: the FDIC national deposit rate for money market accounts was 0.63% as of September 21, 2026.
T-bills held direct. A direct obligation of the US Treasury with a fixed maturity. No fund fee, no fund manager, and no daily liquidity unless you sell. The 3-month Treasury par yield was 4.25% on September 29, 2026, per the US Treasury daily par yield curve.
The current numbers bank by bank sit on the money market rates guide, and the sweep mechanics on the sweep accounts guide.
Net yield after fees in 2026.
Compare net against net. A fund’s headline 7-day yield is net of that share class’s expenses, and the share class you were defaulted into is rarely the cheapest one on the same portfolio.
Getting to the fund’s real number
What the underlying bills, repo and paper actually earn.
Deducted daily. The published 7-day SEC yield is already net of it, but only net of that share class’s expenses.
Institutional share classes charge less and require higher minimums. A brokerage default sweep class is usually the most expensive one available on the same portfolio.
Income from direct Treasury obligations is generally exempt from state income tax; repo and prime paper is not. In a high-tax state that changes the ranking. Ask your accountant, not us.
The Coinstancy Pro side
Not guaranteed, not FDIC insured, and the yield is not a deposit rate. Grid as of September 2026. Published bank and fund rates, with sources, are on the rates page.
The gap, illustrated at two points
Illustration only, not a quoted comparison. It assumes a two-point difference, an illustrative money market fund net yield of 4% against the 6.00% no-lock tier, held for a full year, before tax. The 4% is an assumption set near the 3-month Treasury par yield of 4.25% on September 29, 2026 (US Treasury), not a quoted fund yield: fund yields float daily and your own share class is the one that counts. Run your real numbers through the calculator.
Liquidity compared: T+1 against 48 hours.
The honest summary: the fund is faster and more predictable. The question is whether the difference matters for the specific slice of cash you are placing.
| Dimension | Money market fund | T-bills held direct | Coinstancy Pro |
|---|---|---|---|
| Normal redemption | Same day if you hit the cut-off, otherwise T+1 | At maturity, or same-day sale on the secondary market | Available within 48 hours |
| Cost of leaving early | None in normal conditions | Market price on sale; you can realise a loss if rates rose | No-lock tier: none. Locked tier: capital returned, accrued interest forfeited |
| Penalty on principal | None | None if held to maturity | None |
| Conditions attached | Institutional prime and municipal funds can apply a mandatory liquidity fee under 2a-7 | Secondary market pricing and settlement | 48-hour window; onward bank settlement follows your own bank’s timetable |
| Predictability | High and well documented | Highest: the maturity date is fixed | A window, not an instant transfer |
What 48 hours actually means
It is a window during which the withdrawal is made available, not a same-day transfer. On a locked tier, exiting early returns your capital in full and forfeits the accrued interest; there is no penalty on the principal. Onward settlement to your bank then runs on your bank’s own timetable. Plan around the window rather than against it; the mechanism page sets out each step.
Fund liquidity is not unconditional either
Worth stating for completeness rather than as a point against the fund: institutional prime and municipal money market funds can apply a mandatory liquidity fee when daily net redemptions exceed the regulatory threshold. Government funds are the ones people mean when they say a money market fund is always liquid, and for them, in practice, it is.
The nature of the risk: counterparty against smart contract.
These are not the same risk at different sizes. They are different shapes. A fund’s risk is diversified across many issuers and shows up as small deviations; a protocol failure is closer to binary and can correlate across positions. Size the allocation to the shape, not to the yield.
The fund’s risks
counterparty and creditOur risks
protocol and codeFunds are covered by OpenCover on Sensitive Protocols defined by Coinstancy, subject to policy terms, limits and exclusions. Full scope on the coverage page; the protocol selection criteria are on the protocols page.
What the fund gives you that we do not
Coverage through a policy is a narrower promise than a regulated fund structure, and we would rather say so here than have it surface in your risk committee.
The decision table.
The question is never “fund or stablecoin”. It is which bucket of cash you are placing, and what constraint binds first. Find your row.
| Your situation | Where the cash belongs | Why |
|---|---|---|
| Cash needed for payroll, payables or a draw inside 30 days | Money market fund | Same-day or T+1 settlement, and two points of yield over one month is not worth a settlement window you might miss. |
| A known outflow on a known date (tax, earn-out, acquisition instalment) | T-bill maturing before that date | The maturity matches the liability. No reinvestment risk, no timing judgement to make. |
| Treasury policy restricts eligible instruments to rated or regulated vehicles | Money market fund | There is nothing to argue about. Change the policy first if you want to, but do not work around it. |
| Reserve you have not touched in a year, timing genuinely uncertain | No-lock tier at 6.00% | Withdrawals available within 48 hours, no forfeiture, and the gap compounds while the cash waits. |
| Reserve ring-fenced for a quarter or more, with a board that has signed off | Locked tier, 6.25% to 6.75% | The term fixes the rate. Early exit returns capital and forfeits accrued interest. That is the trade you are accepting. |
| You already hold USDC and it is sitting idle in a wallet | Coinstancy Pro | No conversion, no FX, and coverage on protocol events you almost certainly do not have today. |
| No eligible entity, or Know Your Business (KYB) verification cannot be completed | Money market fund | KYB is required before the first deposit. Without it there is no account to open. |
| Balance above insured limits sitting in an operating bank account | Move it out first, then decide | Concentration at one bank is the risk to fix on day one. A money market fund or an insured cash sweep does that. Allocating a slice is the second decision, not the first. |
Most treasuries end up on more than one row. Operating cash and the near-term buffer stay in the fund; only the reserve that has genuinely sat still gets allocated. That split is the intended use: see the bank comparison and the sweep setup.
The cases where the money market fund wins.
Six situations where the fund is the better answer and we are not. If one of them describes your cash, stay where you are. There is no version of this page that argues otherwise.
Our withdrawal window is 48 hours, and that is a window, not a button. If the cash might be needed the same afternoon, the fund is simply the right instrument and we are not.
Two points on $50,000 is roughly $1,000 a year before tax, on the same illustration used above. That does not pay for a KYB file, a policy amendment and a new counterparty in your controls.
A money market fund generally qualifies as a cash equivalent on the balance sheet. A stablecoin position generally does not, and your auditor makes that call, not us. If the classification matters to a covenant or a reporting line, the fund wins outright.
A prospectus, a custodian, an auditor, daily holdings disclosure and a regulator with jurisdiction. Those are real protections. We are covered through OpenCover for specific protocol events, which is a narrower thing and not a substitute.
Depeg of the underlying stablecoin is not a covered event. If your policy treats that exposure as unacceptable (a defensible position), no amount of yield resolves it.
When the short end pays well, the gap narrows and the case for taking additional risk gets weaker on its own terms. With the 3-month Treasury par yield at 4.25% on September 29, 2026 (US Treasury), the gap to the 6.00% no-lock tier is under two points. That arithmetic runs against us and we would rather you check it than take our word for it.
And where we think we are worth a slice
One case, stated as narrowly as we can defend it: a reserve you have not touched for two or more quarters, held by an entity that can complete a KYB, under a treasury policy that permits a defined non-bank allocation with a cap. For that slice, 6.00% with no lock or up to 6.75% at twelve months, with coverage through OpenCover on protocol events, is a trade worth putting in front of a board. Everything else in your treasury should probably stay in the fund.
Sources and further reading
The figures and claims on this page rest on the documents below. Time-sensitive figures (rates, yields, fees, market data) move: check the live value at the source before acting on it.
- SEC, Money market fund rules (Rule 2a-7 and the July 2023 reforms)sec.gov
Stable and floating net asset value fund types, and the mandatory liquidity fee for institutional prime and municipal funds.
- US Treasury, Daily Treasury par yield curve rateshome.treasury.gov
3-month Treasury par yield of 4.25% on September 29, 2026, the benchmark behind the illustrative 4% bank rate used in the arithmetic.
- FDIC, National rates and rate capsfdic.gov
National deposit rates as of September 21, 2026: 0.37% for savings accounts and 0.63% for money market accounts.
- FDIC, Deposit insurancefdic.gov
Standard insurance amount of $250,000 per depositor, per insured bank, per ownership category, and what FDIC coverage does not apply to.
- Federal Reserve, Open market operationsfederalreserve.gov
Federal funds target range of 3.75% to 4.00% since September 17, 2026, the policy rate behind the deposit and T-bill rates cited here.
- Circle, USDC transparencycircle.com
USDC reserve attestations. Supports the stablecoin depeg risk described on this page, which is not a covered event.
Last reviewed: September 2026. External links open in a new tab; Coinstancy is not responsible for their content.
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