Franklin Templeton and Bybit announced on Sept. 28 that eligible institutional clients can pledge tokenized money market fund shares issued through Franklin Templeton’s Benji platform as collateral for USDT or USDC credit lines, according to Cointelegraph. The shares stay in off-exchange custody rather than being moved onto the exchange.
Cointelegraph reported that the arrangement lets clients position capital on the exchange without selling their fund holdings or transferring them to Bybit, so the assets continue to earn fund yield while also backing a trading position. Franklin Templeton and Bybit are also planning a tokenized investment product for wallet users on Bybit and the Mantle network, though the companies did not disclose its details.
Also read: CFTC allows tokenized funds and on-chain records, not Bitcoin
Key facts
- Eligible institutions pledge Benji-issued shares through the ByCustody platform and receive a USDT or USDC credit line on Bybit; Blockchainreporter reported that Bybit mirrors the shares’ value inside its trading environment so the fund’s yield keeps accruing.
- Franklin OnChain U.S. Government Money Fund, also called FOBXX, held $686.64 million in net assets as of Aug. 31, 2026, per Crypto.news.
- Franklin Templeton and Binance launched a comparable off-exchange collateral program on Feb. 11, 2026, with Ceffu providing custody.
- Bybit’s global head of RWA and TradFi, Yoyee Wang, said in the announcement that institutional investors increasingly expect flexibility and risk controls similar to those they use in traditional markets.
- Sandy Kaul, who leads digital assets and innovation at Franklin Templeton, said Benji connectivity gives institutions another venue for deploying regulated, yield-bearing assets.
A pledge, not a deposit
The structure separates custody from trading access. Blockchainreporter described it as a pledge through ByCustody rather than a deposit on the exchange itself, with ByCustody holding the assets off-exchange while Bybit recognises their mirrored value when extending credit. Bybit began connecting external custodians in 2025, including Zodia Custody and Sygnum; under the Sygnum setup, trading profit and loss settles automatically every eight hours, according to Blockchainreporter.
Crypto.news reported that Bybox’s off-exchange model has already been tested with another tokenized fund: in June, quantitative fund Calais Digital Assets used UBS’s tokenized uMINT money market fund as off-exchange collateral through Bybit, ByCustody and DigiFT.
Also read: US and UK Treasuries Move to Harmonize Stablecoin and Tokenization Rules
Terms left undisclosed
The announcements leave several institutional specifics open. Blockchainreporter noted the releases do not say which fund in Franklin’s lineup qualifies, what loan-to-value ratios, haircuts or fees apply, how a margin shortfall against shares held in custody would be handled, how often settlement occurs, or what makes a client eligible. Franklin Templeton’s Roger Bayston said of the Binance version that pledged assets are not rehypothecated or moved onto the exchange, but whether the same terms carry over here has not been spelled out. The program is new, so there is no track record of its behaviour in a fast market.
Why it matters
Institutions weighing crypto trading have had to choose between holding yield-bearing regulated assets and posting collateral that sits idle. This program lets the same holding do both, and it adds Franklin Templeton to a custody-and-collateral expansion that already runs through Binance, Payward, MoonPay and HashKey Exchange. It also pushes Bybit further into traditional-asset exposure, coming days after the exchange added stock-linked perpetual contracts to Copy Trading. Franklin Templeton reported $1.83 trillion in total assets under management as of Aug. 31, 2026, and $85 billion in cash-management assets at month-end, according to Crypto.news.
What to watch
Bybit and Mantle have said they will release details of the wallet-based tokenized wealth product separately, but no name, fee, minimum, eligibility rule, jurisdictional availability or start date has been given. Blockchainreporter noted the same gap on the institutional side, where collateral terms have not been published; the program’s behaviour under stress has not yet been observed.
This article is not financial advice, and crypto and tokenized fund markets are volatile and uncertain.
Reported by cointelegraph.com.
Sources: Cointelegraph, Blockchainreporter, Crypto.news
