Key Insights:
- Franklin Templeton lets eligible Bybit clients pledge tokenized fund shares for USDT or USDC trading credit.
- ByCustody holds the shares off-exchange while clients continue earning the fund’s yield.
- Franklin Templeton previously joined similar collateral programs with Binance and OKX.
Franklin Templeton is bringing tokenized money market fund shares to Bybit’s off-exchange collateral program. Eligible clients can pledge the shares for trading credit denominated in USDT or USDC, the firms announced Monday.
The arrangement lets clients retain the fund’s yield while using their holdings to support activity on the crypto exchange. The shares themselves stay with the custodian, ByCustody. Bybit records its value in its trading system.
The latest expansion places a traditional fund inside a crypto credit workflow without transferring its shares to the exchange. The announcement puts the relevant tokenized shares at about $686 million in net assets. It does not say clients have pledged the full amount or received equivalent credit.
How Franklin Templeton Shares Back Stablecoin Credit Lines
Franklin Templeton issues the shares through Benji, its blockchain-based recordkeeping and transfer agency platform. On the issuer’s site, one BENJI token represents one share of the Franklin OnChain U.S. Government Money Fund. The fund uses ticker FOBXX. The token records fund ownership, rather than representing a separate claim to cryptocurrency.
FOBXX invests mainly in U.S. government securities, cash, and repurchase agreements backed by those assets. It seeks to preserve a $1 share value, although the issuer does not guarantee that price. According to the Benji site, shareholders accrue yield daily through newly issued tokens. The fund launched on Stellar in April 2021 and later expanded across other networks, including Ethereum and Solana.
Yield continues on pledged holdings. The latest seven-day annualized rate is 3.7%. That rate reflects recent fund income and can change. Borrowed USDT or USDC provides trading liquidity; it does not require clients to sell their fund shares.
Franklin Templeton reported $1.83 trillion in companywide assets under management as of Aug. 31. That figure measures the asset manager’s full business. It differs from the $686 million net asset figure associated with the tokenized shares in this arrangement.
Binance and OKX Already Use Similar Collateral Arrangements
Franklin Templeton introduced a similar off-exchange structure with Binance in February. In that program, eligible institutions pledge Benji-issued shares held by Ceffu. Binance mirrors their value for trading. Clients can use yield-bearing assets without depositing the fund shares on Binance.
OKX announced a collateral-mirroring pilot with Standard Chartered in 2025, with Franklin Templeton participating. Standard Chartered holds the collateral independently, while OKX recognizes its value for trading. Bybit adds another venue for Franklin Templeton fund shareholders seeking to use holdings as trading collateral.
The firms also plan a separate tokenized wealth product involving Bybit and Mantle. They have not released any product terms or launch date. That planned offering sits apart from the collateral credit lines announced Monday.
Franklin Templeton and Bybit Collateral Terms Remain Undisclosed
The companies have not disclosed several terms governing the new service. Those include collateral haircuts, loan-to-value limits, minimum holdings, and maximum USDT or USDC credit lines.
They also have not published fund-specific liquidation procedures or detailed treatment following a client default. Those terms determine how much usable trading credit each dollar of pledged fund shares can support.
Off-exchange custody reduces direct reliance on exchange wallets but does not remove financial risk. Clients remain exposed to fund performance, trading losses, credit terms, and collateral requirements.
Franklin Templeton reported $1.83 trillion in companywide assets under management as of Aug. 31. That figure covers its entire asset-management business and should not be confused with BENJI fund assets.
Bybit and Franklin Templeton also plan a separate tokenized wealth product involving Mantle. They have not disclosed the product’s launch date, fees, investment minimums, or final product structure.
For now, the operational development is the institutional collateral program. Future disclosures on credit terms and pledged assets will show the extent to which clients use tokenized fund shares for exchange liquidity.
This article is for informational purposes only and does not constitute financial or investment advice. Fund yields, collateral values and credit terms can vary.
