Franklin Templeton is preparing to place tokenized assets in traditional investment funds, further embedding blockchain into the mainstream asset management infrastructure.
According to a Bloomberg report, the company plans to use its Franklin Onchain U.S. Government Money Fund, known as BENJI, as portfolio assets or collateral within exchange-traded funds (ETFs) and mutual funds. Implementation of this strategy could begin as early as the fourth quarter, pending approval by the boards of directors of the individual funds.
The Securities and Exchange Commission (SEC) approved this structure by issuing a no-action letter, which allows Franklin's funds to use the tokenized money market product for cash management and as collateral.
"This is the first time the SEC has stated that a product natively created in a digital format can be used in traditional financial products," said Sandy Kaul, Head of Digital Asset and Industry Advisory Services at Franklin.
Tokenization Enters the Fund Management Market
This shift goes beyond issuing blockchain versions of existing securities.
Franklin has already been distributing tokenized funds through digital wallets. Now the company intends to use these assets within traditional portfolios to improve liquidity management and enhance the efficiency of deploying idle cash.
The funds could begin holding BENJI tokens immediately after product implementation, though board approval will still be required.
The potential reach is significant. Franklin manages over 130 ETFs globally with approximately $82 billion in assets, and its mutual funds hold about $790 billion. Its tokenized money market funds manage around $2.6 billion in assets.
Wall Street's Tokenization Push Expands
This move comes as tokenized real-world assets are gaining popularity in the traditional financial sector.
According to RWA.xyz, the market value of tokenized assets has surpassed $38 billion. Companies like BlackRock and BNY have also expanded their blockchain-based fund and settlement initiatives.
The appeal of this approach is clear: tokenized assets enable faster settlement, 24/7 transfers, and more efficient collateral use.
Franklin's approach adds another layer. Instead of asking investors to seek out tokenized products themselves, the company can seamlessly integrate them within traditional funds as part of daily portfolio management.
Franklin also plans to launch additional tokenized products that could eventually serve as cash or collateral in more funds across its lineup. This marks a significant evolution in tokenization. The technology is transforming from a "wrapper" around an investment into the underlying mechanism itself.
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