Franklin Templeton’s LUIXX & DIGXX Now Accept Stablecoin Reserves & On-Chain Settlement—Institutional Adoption Accelerates

Franklin Templeton just rewired two of its flagship money market funds for the blockchain era.

LUIXX and DIGXX—both stalwarts in the institutional cash management space—have been quietly upgraded. The move lets them hold stablecoins as eligible reserves and, more critically, enables full on-chain settlement of fund shares. No more waiting for legacy rails to clear; transactions finalize at the speed of the underlying blockchain.

Why This Isn't Just a Tech Upgrade

This is a structural shift. By embracing on-chain settlement, Franklin Templeton isn't just adding a feature—it's bypassing the traditional custody and transfer agent bottlenecks that add days (and fees) to the process. It turns fund shares into programmable assets, opening the door for 24/7 liquidity and integration with DeFi protocols. For institutions, it cuts settlement risk from days to minutes.

The Stablecoin Play

Allowing stablecoins as reserve assets is the other half of the equation. It provides a direct, yield-bearing on-ramp for crypto-native capital. Instead of converting to fiat to enter the fund, large holders of USDC or similar can move in-kind, preserving their market position and leveraging the fund's yield strategy immediately. It's a nod to the growing reality that for many, the dollar is already on-chain.

A quieter, more significant step than any headline-grabbing Bitcoin ETF—this is the plumbing getting replaced. While some traditional finance veterans might scoff at 'internet money' in a $1.4 trillion asset manager's portfolio, they're the same ones who once questioned why anyone would need email. The future of finance settles instantly, and Franklin Templeton just ensured its funds won't be left waiting at the terminal.

LUIXX to serve as stablecoin reserve vehicle

The LUIXX fund has been amended to comply with the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, passed in 2025. The law sets the requirements for assets held as reserves for regulated stablecoins.

According to Franklin Templeton, the fund now holds short-term U.S. Treasuries with maturities of less than 93 days, which means it is both liquid and complies with the new regulation’s requirements regarding the quality of its reserves. 

A spokesman confirmed that stablecoin issuers could utilize the Treasury Obligations fund for the specific purpose of reserve management, while still complying with the existing oversight of the US Securities and Exchange Commission. In addition, the change makes LUIXX one of the first money market products to be designed specifically to comply with stablecoin reserve requirements under the guidance of the Federal Government.

DIGXX adds digital on-chain share class

The second fund, DIGXX, has put in place what Franklin Templeton calls a Digital Institutional Share Class. This class allows recording and transferring shares in funds through blockchain-based networks, which offer close to instant settlement and continuous transaction availability.

By operating on-chain, DIGXX can settle transactions 24 hours a day, thus reducing settlement delays that are typical with legacy fund transfers. According to the report, the on-chain functionality doesn’t affect the underlying portfolio composition, which still follows the rules governing US money market funds. 

Franklin Templeton’s integration with tokenized finance infrastructure

Roger Bayston, Head of Digital Assets at Franklin Templeton, stated that the regulatory environment established by the GENIUS Act enabled the bridging of these funds with blockchain-based applications. He acknowledged that the intention was to enable institutions to function in controlled markets with the same standards that applied to traditional funds.

The update to LUIXX and DIGXX follows previous steps taken by Franklin Templeton to integrate its products with blockchain systems. In November 2025, the firm launched a tokenized money market fund in Hong Kong and added its Benji Technology Platform to the Canton Network. The company is also responsible for the US state of Wyoming’s FRNT stablecoin, the first state-issued dollar-backed token.

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