Franklin Templeton Launches Tokenized Collateral Service on Bybit, Backed by $686 Million in Underlying Assets

Franklin Templeton has announced that its tokenized shares from a money market fund, totaling $686 million in net assets, will be accepted as collateral on the exchange platform Bybit for margin trading in USDT or USDC while generating an annualized yield of 3.7% according to the September 28, 2026 press release (Source: CoinDesk).

Franklin Templeton Unveils $686 Million Tokenized Collateral Service on Bybit

The new program allows Bybit users to deposit digital shares from Franklin Templeton's money market fund as collateral without needing to transfer the actual assets. The value of the shares is reflected in Bybit's trading environment, providing immediate liquidity for margin operations. This approach relies on a regulated custodian platform, ByCustody, which holds the assets off-exchange while ensuring value parity.

Practically, investors deposit their tokenized shares, which remain under ByCustody's custody, while Bybit creates a "mirror" of their value to unlock loans in stablecoins. The mechanism eliminates the need for on-chain transfers, thereby reducing transaction costs and confirmation delays, a benefit highlighted in the press release (Source: CoinDesk).

The Issuance Model via Franklin Templeton's Benji Platform

The tokenized shares are issued through the Benji Technology Platform, Franklin Templeton's proprietary infrastructure that integrates blockchain into the tracking and transfer of securities. Benji ensures asset traceability and regulatory compliance while offering an annualized yield of 3.7% based on the seven-day average rate indicated by the fund manager.

This 3.7% yield stands out in the traditional money market fund sector, where rates are often below 2% in Europe. The ability to offer this rate while maintaining off-exchange custody constitutes a key selling point for attracting traders seeking to optimize their crypto asset margin positions on trading.

Existing Partnerships with Binance and OKX

The partnership with Bybit follows Franklin Templeton's existing strategy, which already offers its tokenized money market funds to users of Binance and OKX. These prior collaborations have demonstrated the viability of the off-exchange collateral model, paving the way for broader adoption across major exchanges.

Feedback from Binance and OKX has indicated increased use of tokenized collateral, though exact figures were not disclosed. Expanding to Bybit strengthens Franklin Templeton's presence in the crypto landscape by offering traders a broader range of margin financing options.

Market Actors Already Accepting Tokenized Funds as Collateral

Beyond Franklin Templeton's platforms, other market players have integrated tokenized funds into their margin requirements. For instance, Crypto.com and Deribit allow institutional and professional users to use BlackRock's BUIDL fund as collateral for derivative positions, according to the same press release (Source: CoinDesk).

This trend reflects a shift in the collateral framework, where traditional digital assets are giving way to more flexible tokenized products. The recognition of these products by multiple exchanges reinforces the legitimacy of the tokenized collateral model.

Sandy Kaul on the Opportunity to Optimize Collateral

"I can now examine the leading platforms and, as an investor, use my collateral in an optimal way while generating yield," said Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton, in an interview cited by CoinDesk. She emphasized that this mechanism represents "a critical unlock for enabling ecosystem growth."

Kaul also noted that the ability to design products specifically tailored for this investment channel based on portfolios represents "a wonderful opportunity for us as an asset manager." These remarks underscore Franklin Templeton's strategic vision to become a major player in decentralized crypto financing.

Implications for Crypto Investors and Regulatory Framework

For French and European investors, the service offers the ability to place traditional money market funds into a crypto environment while remaining under the custody of a regulated entity. The use of ByCustody ensures that assets comply with financial regulatory requirements, a critical point for holders of PEA or CTO accounts looking to diversify their exposures.

The fact that assets are not transferred onto the blockchain reduces risks related to network volatility and gas fees while maintaining traceability through Benji's blockchain technology. This architecture could serve as a model for other institutions seeking to offer similar services, thereby strengthening the convergence between traditional finance and crypto-assets.

The Service Offers an Annualized Yield of 3.7%, One of the Most Attractive in the Sector

With an annualized yield of 3.7%, Franklin Templeton's tokenized fund ranks among the most competitive offers in the crypto collateral market. This rate, combined with the ability to generate margin lines in stablecoins without asset movement, creates a unique operational efficiency lever for active traders.

In summary, the launch of the tokenized collateral service on Bybit, supported by $686 million in assets and backed by a regulated custody infrastructure, marks a key step in structuring a more mature and interoperable crypto financing ecosystem.