- Franklin Templeton is turning Benji assets into institutional collateral.
- FOBXX held $686.64M with a 3.57% 7-day yield in September.
- Undisclosed LTVs and borrowing costs will determine collateral efficiency.
Franklin Templeton is expanding its tokenized money market funds from investment products into institutional collateral.
The $1.7 trillion asset manager has partnered with Bybit to let eligible institutional clients pledge fund shares issued through its Benji Technology Platform for USDT or USDC trading credit.
The deal gives a clearer purpose to tokenization beyond issuance and settlement. Franklin Templeton is building a model in which a regulated fund can generate income for its holder while also serving as financing collateral inside crypto markets.
A $687M Fund Gets a Second Job
The asset behind the model is Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX).
FOBXX held $686.64 million in net assets as of Aug. 31. Its 7-day current yield stood at 3.57% on Sep. 15, while its 7-day effective yield was 3.63%. The fund invests at least 99.5% of its assets in U.S. government securities, cash and repurchase agreements fully collateralized by government securities or cash.
That income component helps explain the appeal of the collateral structure.
Under the Bybit arrangement, eligible clients can pledge Benji-issued tokenized money market fund shares through ByCustody. Their collateral value is mirrored on Bybit, where the institution can receive a USDT or USDC credit line for trading. The pledged shares remain off-exchange and continue earning their underlying fund yield.
Instead of choosing between holding the fund and releasing capital for trading, an institution can potentially do both.
The stablecoins are borrowed capital, however, not additional fund return. Whether the combination is economically attractive depends on the terms attached to that credit.
Bybit Adds Another Venue for Benji Collateral
Franklin Templeton already introduced a comparable model with Binance in February.
Eligible Binance institutional clients can use Benji-issued tokenized money market fund shares as off-exchange collateral while the assets remain with third-party custodian Ceffu.
Bybit expands that architecture to another exchange and custody arrangement.
For Franklin Templeton, broader collateral acceptance increases the utility of the existing fund without requiring a separate investment product for each trading venue.
For institutions, it introduces another factor when choosing between tokenized assets: where they can be pledged.
The 3.57% Yield Is Only Half of the Calculation
FOBXX gives us one side of the economics.
Its latest available 7-day current yield was 3.57%, but Bybit and Franklin Templeton have not disclosed the collateral haircut, loan-to-value ratio, borrowing rate, credit limits or liquidation thresholds attached to the new program.
Those missing numbers determine the actual financing value of the asset.
A $10 million position cannot be assumed to produce $10 million in stablecoin credit. A collateral haircut would reduce borrowing capacity, while interest or other financing charges would reduce the benefit of retaining the fund yield.
This is where collateral efficiency becomes useful.
A tokenized fund offering a competitive yield but poor borrowing terms may be less useful to an active trading desk than one accepted at several venues with lower haircuts and cheaper credit.
Franklin Templeton Is Building a Second Route Through Bybit
The partnership also includes a separate product aimed beyond institutional collateral.
Franklin Templeton and Bybit plan to develop a tokenized wealth-management product distributed through Bybit and the Mantle ecosystem. Its investment strategy, fees and launch date have not been disclosed.
The product is therefore not yet comparable with the live collateral program.
But the two initiatives target different parts of the same distribution network: institutional financing through tokenized collateral and wallet-based access through a future investment product.
The Next RWA Metric May Be Borrowing Power
Tokenized funds have largely competed on assets, yield and distribution.
Collateral adds financing utility.
A fund that can be pledged across several exchanges and custody arrangements can unlock capital in more places without requiring the underlying investment to be redeemed.
That gives Franklin Templeton another way to scale Benji beyond simply attracting additional assets.
The next phase of the RWA market may therefore be measured not only by how much value is tokenized, but by how much financing that value can support.