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> If VMFXX was tokenized on the blockchain it would be used in exactly the same way.

I'm going the opposite direction here.

If Tether / USDC really wished to "prove that they have liquidity reserves", they should go to the US Government and get the "Money Market Fund" / "Money Market Account" stamp of approval. And then invite the banking regulators to come in and count all their reserves.

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I don't disagree here. My point was just that the interest that you see on exchanges is not directly related to the stablecoins.

I'm not sure if there are any legal or regulatory issues that would prevent stablecoins from getting those certifications. Tether definitely looks sketchy, but USDC has regular audits with public results.

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