Franklin Templeton has partnered with Bybit to let eligible institutional clients pledge tokenized money market fund shares as collateral for trading, while keeping the underlying assets in custody off-exchange. The deal mirrors arrangements Franklin Templeton already runs with Binance and OKX, and adds Bybit and the Mantle network to that lineup.
Franklin Templeton has teamed up with Bybit to give qualified institutional investors access to tokenized money market funds that can back their trading activity on the exchange. The arrangement lets clients use fund shares as collateral without selling their holdings.
Fund shares issued through the Benji platform
Franklin Templeton issues the tokenized shares through its Benji Technology Platform. Clients pledge those shares through ByCustody, Bybit's institutional custody platform, and eligible investors can then be granted USDT or USDC credit lines for trading. The underlying assets stay off-exchange and are only acknowledged as part of Bybit's trading system, so investors keep earning yield on the fund while the shares back their positions.
The asset manager manages approximately $1.7 trillion in assets, and the tokenized money market fund tied to the program currently holds net assets of approximately $686 million. As reported earlier by CoinGape, the SEC's Division of Investment Management issued a no-action letter on 12 August covering investment in a Franklin OnChain Money Fund that invests in U.S. Government Money Funds. The SEC staff said it would not recommend enforcement action under the described arrangement, subject to stated conditions, though the letter does not constitute official Commission approval.
ByCustody keeps the assets off-exchange
ByCustody holds the tokenized fund shares rather than transferring them onto Bybit directly, and the exchange reflects their value on its platform. Bybit's Global Head of RWA and TradFi, Yoyee Wang, said institutional investors are looking for more flexible collateral options. According to CoinGape: "It's opening up the regulated investment product."
Franklin Templeton already runs similar off-exchange collateral arrangements with Binance and OKX, and the Bybit partnership adds another exchange to that network. Separately, Bybit has expanded its regulated presence in Europe after Bybit Payments GmbH acquired an Electronic Money Institution license from Austria's Financial Market Authority.
Product expected to reach institutional clients via Mantle
The product is expected to function via Bybit and the Mantle network, giving clients access to certain Franklin Templeton investment strategies; Bybit and Mantle will provide more details individually. Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton, said the collaboration is a way to expand the Benji platform into a new digital marketplace. The companies also intend to offer programs on diversification and investment objectives alongside the tokenized custody and trading facilities.
Source: CoinGape
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