Franklin Templeton, the investment firm, has decided its tokenized money market funds are not just for buying and holding. They are now collateral. The company has brought its “off-exchange collateral program” to Bybit, the exchange, meaning users can pledge shares in Franklin Templeton’s tokenized funds to borrow USDT or USDC while those underlying assets keep earning yield elsewhere.
Here is how it works. The shares themselves are issued through Benji Technology Platform, Franklin Templeton’s proprietary blockchain-integrated record keeping and transfer agency infrastructure. The underlying assets are held off-exchange through ByCustody, a regulated custody platform. That means the actual cash and securities sit outside Bybit entirely. What sits inside Bybit is a mirrored value — a ledger entry showing what the collateral is worth, not the assets themselves.
The borrower gets the stablecoin credit line. The underlying assets keep earning the yield they were earning before. The arrangement is pitched as a win for traders who want to put their investments to double duty.
What Franklin Templeton Already Did
This is not Franklin Templeton’s first off-exchange collateral play. The firm has previously offered its tokenized money market funds to customers of Binance and OKX. The Bybit deal extends that logic to another major exchange.
The company frames the expansion as part of a broader push toward collateral mirroring in crypto. Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton, made the case directly in an interview.
“So now I’m able to really look across the top exchanges and be able as an investor to use my collateral more optimally while earning yield on it,” Kaul said. “That to me is a critical unlock to really allow the ecosystem to grow. It’s also a wonderful opportunity for us as an asset manager to be designing products specifically for this wallet-based investing channel.”
Kaul’s framing is notable. He is not selling a new fund. He is selling a use case — the idea that the same share can serve two masters at once.
The Numbers Behind the Deal
The shares represent about $686 million in net assets, according to the press release. That is the pool of cash and securities backing the collateral program.
Benji’s current yield stands at 3.7% annualized, based on the latest seven-day rate. That is the return the underlying assets generate while sitting in custody.
The deal gives traders a path to borrow stablecoins without moving their principal. The exchange sees the collateral, but it never touches the assets. That separation is the whole point of the arrangement.
How the Industry Is Doing This
Franklin Templeton is not the only one doing this. Several crypto platforms accept tokenized funds as collateral for trades.
Crypto.com and Deribit both allow eligible institutional and professional users to use BlackRock’s BUIDL fund to back trades, including derivatives positions. That is a similar dynamic — a traditional fund treated as crypto collateral.
| Platform | Collateral Source | Backed Positions |
|---|---|---|
| Bybit | Franklin Templeton tokenized funds | USDT or USDC trading credit lines |
| Binance / OKX | Franklin Templeton tokenized funds | Not specified in the source |
| Crypto.com | BlackRock’s BUIDL fund | Not specified in the source |
| Deribit | BlackRock’s BUIDL fund | Including derivatives |
The comparison shows a pattern. Traditional investment firms are finding ways to make their funds useful on crypto platforms. The platforms are happy to accept them as collateral. The investor gets both yield and borrowing power.
Why Stablecoins Matter Now
Stablecoins are moving into regulated finance, and APAC is becoming a key proving ground for that shift. A separate report maps the region’s rules, use cases, and RLUSD’s role in that transition.
That context matters for Franklin Templeton. The firm is positioning itself as a bridge between traditional finance and crypto. Its funds are already regulated assets. Wrapping them in a token and letting them sit in a regulated custody account while being used as collateral on an exchange is a logical extension of that strategy.
What the Expansion Actually Changes
The practical change is modest. Traders who already hold Franklin Templeton tokenized funds can now use them to borrow USDT or USDC on Bybit. The funds continue to earn yield. Nothing moves.
The strategic change is larger. Franklin Templeton is treating its funds as liquid instruments in a way that was not possible before. A share that was locked up in a brokerage account can now be pledged to an exchange. That is a new kind of flexibility for an investment product.
The Limits of the Deal
The deal is limited to USDT and USDC borrowing. It is not clear from the source whether other stablecoins or fiat currencies are supported. The collateral is also tied to Franklin Templeton’s funds — it is not a generic collateral system that accepts any tokenized asset.
The arrangement also depends on the trust layer. ByCustody holds the assets. If ByCustody fails, the collateral is gone. That is a risk the source does not address.
What We Make of It
Franklin Templeton is betting that crypto traders will treat its funds as working capital rather than just investments. The firm is making its funds more flexible, and it is doing it in a way that keeps the assets regulated and the exposure transparent.
The deal is a small step, but it points somewhere interesting. If tokenized funds become standard collateral for crypto borrowing, the line between crypto-native assets and traditional finance starts to blur. A Franklin Templeton share could be collateral on Bybit today and a BUIDL position tomorrow.
That is the future the company is building toward. Whether traders actually use it is another question. The funds are already large — $686 million in net assets — and the yield is real.
The arrangement is clever, and it is pitched as a breakthrough. It is also a natural extension of what Franklin Templeton was already doing with Binance and OKX. The company is simply adding another exchange to its list of places where its funds can be used.
For now, the deal is announced. Traders who hold the funds can plan on pledging them once the arrangement goes live. The underlying assets stay put. The value moves with the trade. That is the promise, and it is a fair one to make.
Franklin Templeton is a large, established investment firm. It is not a crypto-native company. It is using crypto platforms to extend the usefulness of its own products. That is a sensible move, and it is likely to be copied by other firms.
The collateral mirroring model is still early. The question is whether traders find the arrangement convenient enough to use regularly.
For a trader who wants to borrow stablecoins and keep earning yield, this is a reasonable option. The assets are safe in regulated custody. The borrowing is available on a major exchange. The yield continues uninterrupted.
Whether it becomes a standard feature of crypto trading remains to be seen. For now, Franklin Templeton has shown what is possible.
Source material: “Crypto-friendly institution Franklin Templeton brings its tokenized collateral service to Bybit,” CoinDesk.
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