New Off-Exchange Collateral Model Unlocks Trading Liquidity

Franklin Templeton has expanded its tokenized money market fund infrastructure to Bybit, giving eligible institutional clients a way to pledge shares issued through its Benji Technology Platform as collateral. The underlying assets remain in regulated custody while their value is mirrored on Bybit’s trading platform, allowing clients to continue earning yield on the holdings.

The program, launched September 28, 2026, connects Franklin’s Benji platform directly with Bybit’s custody service ByCustody. Eligible investors can use the tokenized shares to support USDT or USDC trading credit without transferring the assets onto the exchange. This structure provides capital efficiency and reduces counterparty exposure compared with traditional margin arrangements.

The Franklin OnChain U.S. Government Money Fund, which represents the tokenized shares, held $686.64 million in net assets as of August 31. Each share corresponds to one BENJI token on Franklin’s blockchain-integrated recordkeeping system. The fund invests primarily in U.S. government securities, cash, and repurchase agreements, maintaining a stable profile suitable for collateral use.

Yield-Bearing Assets Support Trading Activity

Bybit clients can now deploy their Benji shares for leverage while the assets stay off-exchange. The custody arrangement mirrors the collateral value directly into Bybit’s environment, so traders retain exposure to the regulated money market product and continue receiving its yield. This model separates ownership and custody from trading access, a feature already tested in other institutional programs.

The arrangement follows earlier collaborations with Binance and other platforms. Franklin Templeton has previously used the same off-exchange structure with Binance and, more recently, with other exchanges including OKX. Bybit’s current institutional custody offerings already include tokenized real-world assets alongside traditional crypto collateral.

Previous integrations have extended to platforms such as HashKey and MoonPay. These developments show how Benji shares are moving from isolated custody into broader crypto trading workflows, giving institutions additional tools for treasury management and liquidity deployment.

Strategic Ties Between Bybit and Franklin Templeton

The September 28 announcement marks the start of a broader partnership that also includes plans for a tokenized wealth product aimed at wallet-based investors. The product will use the Mantle blockchain network and provide access to Franklin Templeton’s investment strategies within the Bybit ecosystem.

Bybit and Mantle have not yet disclosed a launch date, product details, or eligibility criteria. Further information will be released separately by both parties. The initiative also encompasses digital content and education programs designed to help retail wallet users explore professionally managed strategies such as goals-based investing.

Yoyee Wang, Bybit’s global head of RWA and TradFi, highlighted the growing demand among institutional investors for flexibility and risk controls similar to those in traditional markets. She noted that the expanded collateral options allow clients to deploy capital more effectively while retaining exposure to regulated investment products.

Tokenization Driving New Institutional Access

Franklin Templeton’s Benji platform continues to expand connectivity across crypto exchanges. In 2026 the asset manager has partnered with MoonPay for on-chain treasury and liquidity workflows, with Kraken’s Payward for collateral and cash management uses, and with HashKey for tokenized U.S. government fund access to professional investors.

The SEC’s Division of Investment Management granted no-action relief in August, enabling Franklin’s registered mutual funds and ETFs to hold shares in the blockchain-based Benji fund under the described custody structures. This regulatory step supports integration of tokenized products into conventional investment vehicles.

Franklin Templeton reported total assets under management of $1.83 trillion as of August 31, with cash-management assets at $85 billion. The company’s digital assets division, led by Sandy Kaul, views tokenization as a means of connecting regulated investment products with digital markets while maintaining familiar capital efficiency standards.

Sandy Kaul, head of digital assets and innovation at Franklin Templeton, said the collaboration extends connectivity of the Benji Technology Platform to Bybit, offering institutions a trusted venue to apply regulated, yield-bearing assets in digital trading environments. She added that the effort exemplifies how blockchain-integrated solutions can drive innovation and efficiency across markets.