Franklin Templeton is expanding its tokenized collateral service to Bybit, allowing eligible institutional traders to use shares of its blockchain-based money market funds as off-exchange collateral. Under the agreement, assets are held securely via ByCustody while their value is mirrored on Bybit to back USDT or USDC credit lines. The expansion comes as Franklin Templeton's tokenized assets under management surpass $2 billion, supported by an August 2026 SEC no-action letter.
Franklin Templeton and Bybit collaboration
- ▪Franklin Templeton and Bybit announced a strategic collaboration on September 28, 2026, to expand Franklin Templeton's off-exchange tokenized collateral program to the Bybit exchange
- ▪Eligible Bybit clients can pledge Franklin Templeton's tokenized money market fund shares to borrow USDT or USDC stablecoins for trading while continuing to earn yield on the underlying assets
- ▪Franklin Templeton and Bybit plan to launch a tokenized wealth product on Bybit and the Mantle chain, alongside retail investor education programs
- ▪Under Franklin Templeton's September 28, 2026 collaboration with Bybit, clients pledge fund shares through the ByCustody platform, keeping assets off-exchange with a regulated custodian while Bybit mirrors their value inside its trading system
Franklin Templeton's Benji platform and FOBXX fund
- ▪Franklin Templeton's Benji platform pays a 3.7% annualized yield based on its latest seven-day rate as of September 28, 2026
- ▪In August 2026, the SEC issued a no-action letter permitting Franklin Templeton's registered funds to use tokenized FOBXX and BENJI tokens for cash and collateral management
- ▪Franklin Templeton's Benji platform runs on multiple blockchains, including Stellar and Ethereum, and its underlying fund shares represent approximately $686 million in net assets
- ▪Franklin Templeton's Benji platform issues BENJI tokens on a strict one-to-one ratio with shares in its Franklin OnChain U.S. Government Money Fund, also known as FOBXX
Earlier collateral partnerships
- ▪Binance's custody partner Ceffu holds the assets for the Binance off-exchange collateral program that Franklin Templeton launched in February 2026
- ▪Franklin Templeton previously launched off-exchange collateral programs similar to its Bybit collaboration, partnering with Binance on February 11, 2026, and Standard Chartered-backed OKX in April 2025
Debatable claims
- ▪Using yield-bearing assets as trading collateral poses unacceptable systemic risks
- ▪Tokenized money market funds are safe enough to serve as collateral for crypto trading
- ▪The integration of traditional asset managers with crypto exchanges does more harm than good
- ▪Off-exchange collateral mirroring effectively protects traders from exchange counterparty risk
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