Franklin Templeton has adapted two institutional money market funds managed by its affiliate Western Asset Management for the blockchain ecosystem, after becoming the first traditional asset manager to launch a tokenized money market fund back in 2022.

Roger Bayston, head of digital assets at Franklin Templeton, said the fund manager recognizes that customers fall into a spectrum between owning a wallet and being active onchain to not yet being involved in digital assets.

He argued that investors who own wallets to hold their onchain investments may not be interested in the same type of investment advice as legacy investors that the firm has has been working with for the past 85 years. Bayston said: “We are trying to capture the whole suite of opportunities that currently exist.”

In January this year Franklin Templeton said in a statement that two traditional Western Asset Management Rule 2a-7 government money market funds are bring updated to work in the digital asset ecosystem.

The Western Asset Institutional Treasury Obligations Fund has been has been updated to only invest in U.S. Treasuries with maturities of 93 days or less. This meets the reserve requirements of the GENIUS Act, the first U.S federal framework for stablecoins which was passed in July last year.

In addition, a new digital institutional share class has been added to the Western Asset Institutional Treasury Reserves Fund to allow approved intermediaries to use blockchain technology for recording and transferring ownership. This provides faster settlement, 24/7 transactions and easier integration with digital collateral and cash management systems.

Bayston continued that traditional funds are already beginning to move onchain, so Franklin Templeton wants to make them more accessible and useful. He said: “By prioritizing interoperability and flexibility, we’re opening more ways for clients to access and deploy regulated funds across the platforms they rely on, giving investors greater choice in how they put their capital to work.”

Franklin Templeton has been building its own blockchain-based technologies since 2017 and launched the first U.S.-registered mutual fund that used blockchain-integrated technology to process transactions and record share ownership in 2021. The firm was also the first traditional asset manager to launch a tokenized money market fund in 2022, represented by BENJI tokens.

“Our first-mover advantage is going to help us stay ahead,” added Bayston. “We remain the only tokenized money fund that uses the blockchain as the system of record.”

Venture capital firm a16zcrypto said in a blog that BENJI tokens act as the legal system of record, making onchain entries the legally binding source of truth. The blog said: “This distinction matters because fund administration — books, records, and compliance — dictates who is legally recognized as an owner, how disputes are resolved, how regulators view the asset, and how investor protections apply.”

Franklin Templeton has updated its transfer agency systems to be able to accommodate large numbers and types of tokenized products, according to Bayston. He continued that being onchain has given Franklin Templeton certain benefits, especially composability. This is the capability to combine and interconnect different blockchain protocols, smart contracts, and decentralized applications to create new systems or outputs.

Franklin Templeton’s Benji technology platform allows the proportional calculation and distribution of yield, down to the second, when a tokenized security is transferred from one party to another. The blockchain platform also enables yield to be paid out every day, including weekends and holidays.

“We have been able to unlock intraday yield down to seconds,” said Bayston. “However many hours, minutes and seconds you on Benji, you get the interest for that day.”

He expects composability and near-instantaneous settlement  to continue to unlock a lot of new and interesting opportunities as the industry moves forward.

“We can bring the creativity that we have from managing assets for 85 years to our tokenization platform,” Bayston added. “We manage both private and public assets, and we are in the middle of constructing what might be next in that universe.”

Reserve management

In addition to updating a fund to meet the requirements of the GENIUS Act, Franklin Templeton was appointed reserves management partner when Wyoming launched the first state-issued stable token in U.S.

In January this year the state of Wyoming said in a statement that Frontier Stable Token ($FRNT) was available to the public. All reserves are held in trust by the state of Wyoming and invested exclusively in U.S. dollars and short-duration U.S. Treasuries managed by Franklin Templeton’s fixed income division.

Mark Gordon, Wyoming Governor, said in a statement: “By introducing the nation’s first state-issued stable token, we are demonstrating how thoughtful, transparent regulation and new technologies can be harnessed to expand access, lower costs, and strengthen public trust. We’re proud to partner with Franklin Templeton — a firm that understands both the rigor of institutional finance and the transformative potential of digital assets.”

Franklin Templeton said the stablecoin market has surpassed $310bn in total supply and is projected to reach $2 trillion by 2030, so demand is growing for regulated, high-quality liquidity across digital payment, settlement, and collateral platforms.

Collateral

Bayston said Benji being used as collateral was a big part of Franklin Templeton developing partnerships in 2025 and that will be extended in 2026.

For example, in November 2025 Franklin Templeton’s Benji Technology Platform connected to the Canton blockchain. Canton said in a statement that this integration creates new opportunities for Canton’s Global Collateral Network, where participants such as market maker QCP plan to now use the platform as a source of liquidity.

Darius Sit, founder at QCP, said in a statement: “This collaboration showcases how regulated tokenized products can power the next generation of institutional finance.”

Crypto-native funds want interest bearing assets to use a collateral, but Bayston highlighted that traditional public and private markets also need more efficient collateral processes. He said: “Money market funds qualify as collateral for trades, but putting them on blockchain rails dials up effectiveness and efficiency.”

All-time highs:

✅ Stablecoins
✅ Tokenized funds
✅ Tokenized commodities
✅ Tokenized stocks pic.twitter.com/HRR7AsAfQq

— Token Terminal 📊 (@tokenterminal) January 19, 2026

Growth prospects

Bayston said the U.S. Securities and Exchange Commission has yet to give permission for third-party distribution of funds on blockchains. He added: “Third-party distribution of these digital asset securities will be a big tipping point in the industry.”

He became “super-interested” in blockchain eight or nine years ago due to the desire to increase opportunities for  investors. He believes blockchain will unlock assets that have not previously been fungible or accessible.

“We are deep into trying to understand how we can use blockchain to enable any number variety of cultural assets and weave those into portfolios,” said Bayston.

Galaxy Asset Management, the digital asset investment firm, said in its annual investor letter for 2025: “If stablecoins are the first wave of disruption, tokenized assets will be the tidal shift that reshapes asset management.”

Tokenized U.S. Treasuries have grown 6× year over year, according to Galaxy. Robinhood and Coinbase have announced tokenized stock trading. NASDAQ has filed proposed rule changes with the SEC to allow the trading of tokenized stocks and ETFs on its exchange beginning in 2026, enabling tokenized securities to trade in the same order book with the same execution priority and shareholder rights.

“We are witnessing the beginning of a world where markets are 24/7, programmable, globally accessible, and reconciled in real time,” added Galaxy.

On 19 January 2026 the New York Stock Exchange announced it is developing  a platform for trading and on-chain settlement of tokenized securities, subject to regulatory approvals.

Michael Blaugrund, vice president of strategic initiatives at ICE, said in a statement: “Since its founding, ICE has propelled markets from analog to digital. Supporting tokenized securities is a pivotal step in ICE’s strategy to operate onchain market infrastructure for trading, settlement, custody, and capital formation in the new era of global finance.”

The NYSE said in a statement that the new digital platform will enable tokenized trading experiences, including 24/7 operations, instant settlement, orders sized in dollar amounts, and stablecoin-based funding.

Bayston added: “The raw materials that we use to manufacture and offer advice is going to come onto blockchain rails and that will mean a lot of change in the underlying operations. I have been in asset management since 1986 and I have never seen a more exciting time.”