Since the 2008 financial crisis, regulators at the Securities and Exchange Commission have been seeking ways to make money market funds safer. But their most recent proposals have some in the financial industry worried that future changes will undermine money market funds’ appeal.

According to Investor’s Business Daily, ”the rules expected to be formally proposed by the SEC could include several changes:

  • A floating NAV, which means money market funds would fluctuate in value like any other mutual fund
  • A capital buffer, which would require a fund sponsor, such as a mutual fund company or bank, to hold reserves that could be used to shore up a troubled money market fund in a crisis
  • Redemption restrictions, which would require funds to withhold a certain amount, say 3% for 30 days, when an investor tries to pull all of his money out of a fund.”

The potential changes are aimed at preventing a future crisis in the asset class. When Lehman Brothers filed for bankruptcy in 2008, the Reserve Primary Fund, the nation’s oldest money market and a big investor in Lehman Brothers short-term debt, “broke the buck” when the net asset value of its shares dipped below the $1.00 mark. Soon after, the U.S. Treasury decided to step in and guarantee all money market fund assets to prevent a run by spooked investors.

While these changes may help prevent a repeat incident, critics of the proposed legislation say it weakens the basic appeal of money market funds — namely, their price stability and daily liquidity.

In order for the reforms to be formally released for comment, the SEC needs approval from at least three of its five commissioners. But Reuters reports that three of those commissioners have “expressed some doubts about the need for more reforms, with at least some of them unlikely to even agree to propose a rule, let alone vote to implement one.”

Although the debate over the nature of new regulations is ongoing, it’s possible that money market funds as investors know them today may soon be a thing of the past.