Key Takeaways
- • Franklin Templeton integrated its Benji blockchain platform with Bybit's ByCustody institutional custody solution, enabling institutional investors to pledge tokenized money market fund shares as off-exchange collateral for crypto trading without forced liquidation.
- • The Franklin OnChain U.S. Government Money Fund held $686.64 million in net assets as of August 31, 2026, with participating clients accessing USDC or USDT credit facilities while maintaining ownership of underlying fund positions and continuing to generate returns.
- • Franklin Templeton manages $1.83 trillion in total assets under management, leveraging its blockchain infrastructure to unlock new liquidity mechanisms for institutional clients seeking to trade actively while preserving fund exposure.
- • The partnership roadmap includes a wallet-integrated tokenized solution built on the Mantle blockchain, signaling expansion of the collateral framework beyond the initial off-exchange program.
Summary
Franklin Templeton has launched a strategic partnership with cryptocurrency exchange Bybit to enable institutional investors to use tokenized fund shares as collateral for digital asset trading. Announced on September 28, 2026, the collaboration integrates Franklin Templeton's Benji Technology Platform with Bybit's ByCustody institutional custody solution, creating a structured mechanism for institutions to access trading liquidity without liquidating their underlying fund holdings.
The arrangement allows participating institutions to deposit money market fund shares issued through Benji while maintaining custody separation from exchange infrastructure. Clients receive credit lines denominated in USDC or USDT, enabling active trading on Bybit's platform. Critically, the structure preserves clients' ability to generate returns from their fund positions even while the shares serve as collateral, addressing a key friction point in traditional collateral arrangements where assets become locked and non-productive.
As of August 31, 2026, the Franklin OnChain U.S. Government Money Fund—the primary tokenized asset in this framework—held $686.64 million in net assets. Franklin Templeton's broader asset management operation oversees $1.83 trillion in total assets under management, providing substantial scale and institutional credibility to support the collateral program. The off-exchange structure ensures regulatory clarity and reduces counterparty risk by keeping assets separately held rather than commingled with exchange operations.
Looking forward, Franklin Templeton and Bybit have outlined plans to develop a wallet-integrated tokenized solution leveraging the Mantle blockchain, indicating an evolution toward more seamless user experience and broader platform interoperability. This roadmap suggests the partnership is positioned as a foundation for expanded institutional adoption of tokenized finance infrastructure rather than a standalone product.
The arrangement allows participating institutions to deposit money market fund shares issued through Benji while maintaining custody separation from exchange infrastructure. Clients receive credit lines denominated in USDC or USDT, enabling active trading on Bybit's platform. Critically, the structure preserves clients' ability to generate returns from their fund positions even while the shares serve as collateral, addressing a key friction point in traditional collateral arrangements where assets become locked and non-productive.
As of August 31, 2026, the Franklin OnChain U.S. Government Money Fund—the primary tokenized asset in this framework—held $686.64 million in net assets. Franklin Templeton's broader asset management operation oversees $1.83 trillion in total assets under management, providing substantial scale and institutional credibility to support the collateral program. The off-exchange structure ensures regulatory clarity and reduces counterparty risk by keeping assets separately held rather than commingled with exchange operations.
Looking forward, Franklin Templeton and Bybit have outlined plans to develop a wallet-integrated tokenized solution leveraging the Mantle blockchain, indicating an evolution toward more seamless user experience and broader platform interoperability. This roadmap suggests the partnership is positioned as a foundation for expanded institutional adoption of tokenized finance infrastructure rather than a standalone product.
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