Franklin Templeton has expanded its tokenised money market collateral framework to include Bybit, allowing eligible institutional clients to access trading credit lines in USDT or USDC. The collateral consists of tokenised money market fund shares issued on Franklin Templeton’s Benji Technology Platform, which serves as a blockchain-integrated recordkeeping and transfer-agency system.
Under this arrangement, clients pledge their tokenised fund shares through ByCustody while retaining the assets in off-exchange custody. This structure enables institutions to continue earning income from the underlying money market funds while using their value to support trading activity, thereby reducing the capital required to be held directly on the exchange. Franklin Templeton previously operated a similar collateral programme with Binance involving Ceffu custody. Additionally, the partnership includes a planned but not yet launched tokenised wealth product for wallet-based investors via the Mantle blockchain, alongside educational initiatives, though specific eligibility criteria, haircuts, fees, and launch details remain undisclosed.
This development signifies a maturation of institutional crypto infrastructure by decoupling asset ownership from exchange custody requirements. By allowing tokenised money market fund shares to serve as collateral while remaining in off-exchange custody, Franklin Templeton and Bybit address a critical friction point for institutional traders: the need to maintain idle capital on centralized exchanges. This model enhances capital efficiency and reduces counterparty risk associated with holding large cash balances on trading platforms, aligning traditional finance yield-bearing assets with digital asset liquidity needs.
From an operational and regulatory perspective, the lack of disclosed parameters such as collateral haircuts, liquidation protocols, and eligibility criteria introduces uncertainty regarding the robustness of the risk management framework. While the precedent set by the existing Binance collaboration suggests a viable template, the extension to Bybit highlights a trend where major asset managers are partnering with multiple exchanges to broaden distribution channels. Stakeholders should monitor how these undisclosed terms compare to industry standards and whether the upcoming Mantle-based wealth product will face distinct regulatory scrutiny given its different technical architecture.
