Franklin Templeton has partnered with Bybit to enable institutional investors to use tokenized shares of its money market funds as trading collateral. Announced on Monday, the program allows eligible clients to pledge fund shares issued through Franklin Templeton’s Benji platform while retaining off-exchange custody. In exchange, clients can access credit lines denominated in USDT or USDC stablecoins to trade on Bybit without selling the underlying assets or transferring them to the exchange. This structure permits institutions to continue earning yield on their holdings while financing crypto trading activities.
The initiative responds to growing demand for tokenized money market funds, which the Bank for International Settlements valued at more than $9 billion as of September 2025. Franklin Templeton’s Benji platform reported $1.98 billion in assets under management as of April, though RWA.xyz data indicates this figure declined to approximately $669 million subsequently. The partnership also includes plans for a tokenized investment product for wallet users on Bybit and the Mantle network, although specific details remain undisclosed. This move aligns with broader industry trends where competitors like BlackRock have established similar collateral arrangements on platforms such as Crypto.com, Deribit, and Binance.
This development signifies a maturation of institutional crypto infrastructure by bridging traditional finance yield products with digital asset liquidity needs. By permitting the use of off-exchange custody assets as collateral, the partnership reduces friction for institutions seeking to deploy capital into crypto markets without liquidating core holdings. It effectively transforms static tokenized treasury instruments into dynamic financial tools, enhancing capital efficiency for professional traders who require immediate stablecoin access for margin purposes.
The competitive landscape suggests that collateral utility is becoming a key differentiator for centralized exchanges targeting institutional flows. With BlackRock’s BUIDL fund already accepted on major venues, Franklin Templeton’s integration ensures it remains relevant in the tokenized real-world asset sector despite recent fluctuations in its assets under management. Market participants should monitor how these credit line mechanisms impact leverage ratios and counterparty risk assessments, as the reliance on off-exchange custody introduces distinct operational dependencies compared to on-chain collateralization.
