Franklin Templeton's tokenized money market fund shares are now accepted as collateral for USDT and USDC trading credit lines on cryptocurrency exchange Bybit, according to an announcement posted September 28.
The partnership enables Bybit traders to pledge BENJI tokens, which represent shares of Franklin Templeton's FOBXX money market fund, as collateral while continuing to earn a 3.7% annualized yield on the underlying assets. Franklin Templeton has made $686 million in tokenized shares available for the arrangement. Franklin Templeton, a $11.2 trillion asset manager, has already positioned itself as one of the largest institutional operators in on-chain finance through prior digital asset integrations.
Franklin Templeton launched its tokenized money market fund on Stellar in 2023 and has since expanded to multiple blockchains including Ethereum. The fund invests in short-duration treasuries and cash equivalents, making it a yield-bearing alternative to stablecoins for institutions seeking regulatory certainty. Bybit, which processes roughly $20 billion in daily trading volume according to third-party data, operates as a primary venue for institutional spot and derivatives trading in Asia and Europe.
Institutions including BlackRock, Invesco and Fidelity have launched similar tokenized products in the past two years, though Franklin Templeton's fund remains one of the few actively used across multiple protocols and exchanges as collateral.
Credit lines backed by tokenized assets carry execution risk distinct from fiat-collateralized lending: smart contract failures, token depegs, or sudden delisting by exchanges can force liquidations with minimal notice. Bybit did not disclose a maximum credit line size or specify margin requirements for BENJI collateral in the announcement.
Franklin Templeton's presence on Bybit places the exchange among operators capturing institutional flow in tokenized finance, a segment that has grown as regulatory clarity around on-chain assets has increased in major jurisdictions. The arrangement gives traders direct access to yield-bearing collateral without custodial counterparty risk, a structural advantage over traditional margin lending in traditional banking.
Bybit and Franklin Templeton have not disclosed the financial terms or time period of the partnership. The document to watch is any disclosure of minimum collateral thresholds, loan-to-value ratios, or maximum credit line allocations, which would clarify the partnership's scale.
