Bybit announced a strategic collaboration with Franklin Templeton on September 28, enabling eligible institutional clients to use tokenized money-market-fund shares as off-exchange collateral. Through this arrangement, clients can pledge Benji-issued fund shares via ByCustody to receive USDT or USDC trading credit lines without transferring the underlying assets onto the exchange.
The structure relies on Franklin Templeton’s Benji Technology Platform, which supports blockchain-based recordkeeping for the Franklin OnChain U.S. Government Money Fund (BENJI). Launched in 2021, BENJI was the first U.S.-registered mutual fund to use a public blockchain as its official system of record. Under the new agreement, pledged assets remain in custody outside Bybit and continue generating yield, while the credit facility supports trading activity on the platform.
This development marks a significant step in integrating traditional finance instruments into crypto-native trading workflows by allowing tokenized real-world assets to serve as collateral. By keeping the underlying fund shares in off-exchange custody while granting stablecoin credit, the model addresses a key friction point for institutions: maintaining asset yield and security standards while accessing liquidity for active trading. It effectively decouples the storage of value from the mechanism of leverage, offering a hybrid approach that respects existing compliance boundaries regarding asset location.
From an institutional adoption perspective, the move highlights the growing utility of tokenized funds beyond simple holding positions. However, the lack of disclosed terms regarding credit extension amounts and valuation parameters introduces operational uncertainty. Market participants will need to monitor how Bybit manages risk exposure when collateral values fluctuate independently of the credit line, particularly given that the announcement does not specify fixed collateral ratios or liquidation protocols.
