Franklin Templeton Overhauls Money Market Funds for Tokenized Finance and Stablecoins in 2026
- Why Is Franklin Templeton Tokenizing Money Market Funds?
- How Do These Funds Fit Into the Stablecoin Ecosystem?
- What Does This Mean for Institutional Crypto Adoption?
- Will Tokenized Funds Replace Traditional Banking Tools?
- How Competitive Is the Tokenized Treasury Market?
- What’s Next for Tokenized Traditional Assets?
- Franklin Templeton’s Stablecoin Strategy: Your Questions Answered
Franklin Templeton isn’t reinventing the wheel—it’s just giving it a blockchain-powered upgrade. The asset management giant has reconfigured two of its institutional money market funds to operate within regulated tokenized finance and stablecoin frameworks. This strategic pivot allows institutional investors to leverage familiar treasury management tools for on-chain liquidity and stablecoin reserves, blending Wall Street’s rigor with crypto’s innovation. Below, we unpack how this MOVE bridges traditional finance with digital assets, why it matters for stablecoin issuers, and what it signals about the future of institutional crypto adoption.
Why Is Franklin Templeton Tokenizing Money Market Funds?
Instead of launching entirely new crypto products, Franklin Templeton opted to retrofit existing funds—a pragmatic approach that minimizes regulatory friction. The Western Asset Institutional Treasury Reserves Fund ($DIGXX) now enables on-chain share transfers via approved platforms, offering 24/7 settlements and seamless integration with digital finance operations. Meanwhile, the Treasury Obligations Fund ($LUIXX) was restructured to comply with the U.S. GENIUS Act (passed July 2025), exclusively holding short-term U.S. Treasury securities (≤93-day maturity) to serve as stablecoin collateral. As Roger Bayston, Head of Digital Assets at Franklin Templeton, noted: "We anticipate stablecoin reserves will be managed both traditionally and via tokenization—this update prepares our clients for that hybrid future."
How Do These Funds Fit Into the Stablecoin Ecosystem?
The retooled funds address two critical needs in regulated stablecoin issuance:and. $LUIXX’s Treasury-only portfolio meets the GENIUS Act’s strict reserve requirements, making it an ideal backing asset for stablecoins like Wyoming’s FRNT token. $DIGXX, while functioning as a conventional money market vehicle, now provides institutional-grade liquidity for on-chain transactions through partners like BTCC and other blockchain-native platforms. Notably, BlackRock and JPMorgan have made similar moves—tokenizing treasury funds on ethereum and adjusting money market products for stablecoin reserves, respectively—signaling broader industry alignment.
What Does This Mean for Institutional Crypto Adoption?
Franklin Templeton’s strategy reflects a growing trend:. By enabling funds to operate on-chain while maintaining SEC Rule 2a-7 compliance, the firm gives institutional investors a familiar entry point into digital assets. As Bayston emphasized, "These weren’t radical changes—minor tweaks let our Treasury fund satisfy GENIUS Act standards and align with our on-chain offerings." The approach lowers adoption barriers for conservative institutions still wary of purely native crypto products.
Will Tokenized Funds Replace Traditional Banking Tools?
Not immediately—but the lines are blurring. While $DIGXX settles transactions on-chain, it remains a registered money market fund with daily liquidity and NAV stability. The key advantage?. Banks, brokers, and crypto platforms can now integrate these funds into existing systems without overhauling legacy infrastructure. For example, an institution might use $DIGXX shares as collateral in a DeFi lending protocol while still reporting them as traditional assets on balance sheets. This duality is why Franklin Templeton calls its digital share class "progressive rather than disruptive."
How Competitive Is the Tokenized Treasury Market?
Extremely. With over $1.2 billion in tokenized Treasury products as of January 2026 (per CoinMarketCap data), Franklin Templeton faces rivals like:
- BlackRock’s BUIDL: Tokenized fund launched March 2025, now dominating Ethereum-based offerings
- JPMorgan’s JPM Coin: Settles intraday repo transactions using tokenized Treasuries
- Ondo Finance: Crypto-native platforms offering yield-bearing stablecoin alternatives
However, Franklin’s dual focus—serving both stablecoin issuers () and general on-chain liquidity needs ()—gives it unique positioning. As Bayston quipped, "We’re not trying to be the coolest crypto project—we’re helping serious institutions do serious business."
What’s Next for Tokenized Traditional Assets?
Expect more dominoes to fall. The GENIUS Act has created a regulatory runway for asset managers to repurpose existing products—not just Treasuries, but potentially corporate bonds and municipal debt. Franklin Templeton hints at expanding its digital share classes to additional funds if demand grows. Meanwhile, platforms like BTCC are racing to build infrastructure that connects these tokenized assets with DeFi applications. One thing’s clear: 2026 will be the year traditional finance learns to speak blockchain fluently.
Franklin Templeton’s Stablecoin Strategy: Your Questions Answered
Which Franklin Templeton funds were updated for tokenized finance?
The Western Asset Institutional Treasury Reserves Fund ($DIGXX) and Treasury Obligations Fund ($LUIXX) were reconfigured—the former for on-chain transactions, the latter as GENIUS Act-compliant stablecoin collateral.
How does the GENIUS Act impact stablecoin reserves?
Passed in July 2025, it defines eligible assets for regulated stablecoin backing. $LUIXX now exclusively holds sub-93-day U.S. Treasuries to meet these standards.
Can retail investors access these tokenized funds?
Currently, they’re limited to institutional clients and approved platforms like BTCC. However, Franklin Templeton may expand access as regulations evolve.
Why tokenize existing funds instead of creating new ones?
It’s faster (no new SEC filings), leverages existing investor trust, and maintains compliance with money market regulations—a "bridge" strategy for cautious institutions.
