Cryptocurrency exchange Bybit has announced a strategic collaboration with Franklin Templeton, the global asset manager overseeing $1.7 trillion in assets and an early mover in digital asset innovation. The first initiative to emerge from the partnership allows eligible clients to use tokenized money market fund shares as off-exchange collateral for trading on the Bybit platform. Franklin Templeton entered tokenization in 2021, when it launched a tokenized U.S. government money market fund that became the first U.S.-registered mutual fund to record share ownership and process transactions on a public blockchain.

Under the arrangement, qualifying investors can pledge fund shares issued through the Benji Technology Platform — Franklin Templeton's proprietary blockchain-based recordkeeping and transfer agency system — via ByCustody, Bybit's institutional-grade custody solution. Pledging these shares unlocks access to USDT or USDC trading credit lines while the underlying tokenized assets remain held in custody off-exchange. The collateral's value is mirrored within Bybit's trading environment, meaning clients can continue earning yield on their holdings even as those assets support their trading positions.

"As institutional adoption of digital assets accelerates, investors increasingly expect the same flexibility, capital efficiency, and risk management standards they are accustomed to in traditional markets," said Yoyee Wang, Global Head of RWA and TradFi at Bybit, in a written statement. "By expanding the range of high-quality collateral available through our off-exchange infrastructure, we are helping clients deploy capital more effectively while maintaining exposure to trusted, regulated investment products," she added.

Extending Access to On-Chain Investors

The initiative sits within Bybit's broader institutional infrastructure and gives eligible clients an additional route to trading liquidity backed by regulated, yield-generating collateral — without transferring those assets onto the exchange itself. According to the announcement, this structure reduces counterparty exposure while strengthening capital efficiency and treasury management. Off-exchange collateral arrangements have become an increasingly common feature of institutional crypto trading since the 2022 collapse of exchange FTX sharpened scrutiny of counterparty risk on exchange balance sheets.

The collaboration also reaches beyond institutional clients to wallet-based investors through a tokenized wealth product offered on the Bybit exchange and the Mantle chain, providing exposure to Franklin Templeton investment strategies. Further details of this offering are to be announced separately by Bybit and Mantle. In addition, the two firms plan to launch digital content programs and educational initiatives designed to help retail investors holding assets in wallets engage with traditional investment strategies and deepen their understanding of concepts such as goals-based investing and diversification.

"Tokenization continues to reshape finance, and we're excited to partner with Bybit to increase access to actively managed retail investment solutions that meet the evolving needs of the wallet ecosystem," said Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton, in a written statement. "For institutions, extending connectivity of the Benji Technology Platform to Bybit offers a trusted venue to put regulated, yield-bearing assets to work in digital markets, and is a great example of how blockchain-integrated solutions can drive innovation and efficiency across markets," she added.

These programs mark the initial phase of a wider partnership aimed at narrowing the gap between investment management and on-chain markets. For institutional participants, the objective is to bring the collateral, custody, and capital efficiency standards of traditional finance into a digital asset trading setting. For wallet-based investors, the aim is to provide access to professionally managed strategies — together with the educational resources needed to apply them — directly within the venues where their assets are held. The partnership lands amid rapid growth in tokenized money market funds, a segment that has expanded into a multi-billion-dollar on-chain market since BlackRock, the world's largest asset manager, launched its own tokenized fund, BUIDL, in March 2024.

Source: Metaverse Post