Franklin Templeton and Bybit have launched an institutional collateral arrangement that allows eligible clients to use tokenized money market fund shares to support trading credit without transferring those assets onto the exchange. According to the official Bybit announcement, clients can pledge Benji-issued fund shares through ByCustody and receive USDT or USDC trading credit. The underlying tokenized assets remain in off-exchange custody while their collateral value is mirrored inside Bybit’s trading environment.
That structure allows institutions to maintain exposure to a yield-bearing money market position while using its value for trading activity. Bybit says the holdings continue earning their underlying yield while pledged, reducing the need to redeem the fund or move the asset onto the exchange before obtaining trading liquidity. The financing therefore separates custody of the investment asset from deployment of its collateral value. The model extends Franklin Templeton’s wider effort to make blockchain-recorded fund shares useful in cash and collateral workflows, including recent SEC relief involving FOBXX.
Off-Exchange Custody Changes the Counterparty Structure
Franklin Templeton issues the eligible shares through Benji, its blockchain-integrated recordkeeping and transfer-agency platform. ByCustody provides the institutional custody layer, while Bybit recognizes the pledged value and makes USDT or USDC credit available for trading. The arrangement does not turn the fund shares into stablecoins or require investors to sell them to obtain trading capital. It instead uses an existing regulated investment position as collateral for a separate digital-asset credit facility.
Important commercial terms remain undisclosed. The announcement does not publish loan-to-value ratios, borrowing costs, liquidation thresholds or the specific money market fund tickers accepted under the program. Those parameters will ultimately determine the capital efficiency and risk of using the tokenized shares as collateral, so the launch establishes infrastructure availability rather than demonstrating its economics for every institutional user. Similar distribution and collateral use cases are emerging as tokenized funds move beyond passive ownership into operational financial workflows.
Wallet Product on Mantle Is Still Planned
The collaboration also extends beyond institutional collateral. Bybit and Franklin Templeton said they intend to develop a tokenized wealth product for wallet-based investors on the Bybit platform and Mantle network, providing access to Franklin Templeton investment strategies. That product is not yet described as live, and the companies have not disclosed its ticker, fees, eligibility rules or launch date. Bybit and Mantle said further details will be released separately.
The planned wallet product reflects a broader shift in tokenization toward distribution through interfaces investors already use. WisdomTree is pursuing a comparable expansion through MoonPay distribution for its WTGXX tokenized money market fund, while Centrifuge has connected tokenized investment products directly to Para-powered wallets. The emerging pattern is not simply putting securities onchain, but connecting those assets to custody, collateral, wallets and settlement infrastructure.
For Franklin Templeton and Bybit, the next measurable milestones are institutional use of the collateral facility and publication of the Mantle product’s final structure. Collateral balances, credit utilization and disclosed financing terms will show whether Benji-issued shares become meaningfully integrated into exchange trading infrastructure rather than remaining an available but lightly used collateral option.