Federated Hermes has jumped into the stablecoin reserve market with a new money market fund explicitly designed to meet the reserve requirements laid out in the GENIUS Act.
Launched in a July 10 announcement, the Federated Hermes Money Market Management Digital Treasury Fund (ticker: OFFXX) is built to serve payment stablecoin issuers that must hold 1:1 reserves in high-quality liquid assets under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The Act, adopted in July 2025, created a federal framework for payment stablecoins and set strict backing and reserve standards that are now moving into implementation.
Key features of the fund
- Objective: preserve principal and generate income for reserve assets.
- Holdings: U.S. dollar cash, U.S. Treasury securities with maturities of 93 days or less, and overnight repurchase agreements fully backed by Treasuries.
- Regulation: intends to operate in compliance with SEC Rule 2a-7 governing money market funds.
- Availability: Reserve Shares are not tokenized on a blockchain today, but can be bought and held by individuals, institutions, and payment stablecoin issuers directly or via intermediaries. Federated Hermes said it may explore blockchain-based ownership records for Reserve Shares or future share classes, and some intermediaries may already use blockchain systems for customer records.
Why this matters for stablecoins
The GENIUS Act’s reserve and reporting requirements have created clear demand for purpose-built reserve vehicles. In addition to the 1:1 backing rule, FinCEN and OFAC have proposed rules that would impose AML and sanctions compliance obligations on permitted payment stablecoin issuers—bringing verification, transaction monitoring, sanctions screening, and suspicious activity reporting requirements in line with other financial institutions. Funds like OFFXX aim to simplify compliance by offering eligible, high-quality liquid assets that meet statutory reserve definitions.
Experienced team and scale
Federated Hermes tapped seasoned liquidity managers to run the fund: Susan Hill, head of the firm’s government liquidity group, and senior portfolio manager John Wyda. The firm emphasized its deep liquidity management experience—reporting $684.7 billion in money market assets and $907.1 billion in total assets under management as of March 31, 2026.
“Liquidity management is a core business of Federated Hermes and we offer one of the largest menus of targeted solutions,” said Paul A. Uhlman, president and CEO of the Federated Advisory Companies. He noted the firm is continuing to evaluate opportunities tied to blockchain and tokenized money market products as interest in digital assets grows.
Market takeaway
With federal agencies still finalizing several GENIUS Act rules and implementation deadlines stretching through 2026, issuers are preparing for new reserve, compliance, and reporting obligations. Federated Hermes’ OFFXX is among the early launches aiming to supply the market with compliant, high-quality reserve options tailored to the evolving regulatory landscape for payment stablecoins.
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