Bybit and Franklin Templeton Unleash Tokenized Collateral Power

Bybit, the second-largest cryptocurrency exchange by trading volume, has partnered with Franklin Templeton to allow institutional clients to trade against tokenized money fund shares held off-exchange. The collaboration starts with a new off-exchange collateral program that unlocks trading liquidity for institutions.

The program uses Benji, Franklin Templeton's blockchain-integrated recordkeeping and transfer agency platform, to issue the fund shares. Clients pledge them through ByCustody, Bybit's institutional custody platform, and receive USDT or USDC trading credit lines on the exchange.

Bybit's global head of RWA and TradFi, Yoyee Wang, said that the program helps clients deploy capital more effectively while maintaining exposure to trusted, regulated investment products. The appeal for institutions is reduced counterparty exposure, as keeping collateral outside the exchange limits what a client stands to lose if the venue fails or is hacked.

Franklin Templeton has set up a similar arrangement with Binance in February, and now its tokenized funds are accepted as collateral at both Binance and Bybit. The partnership also plans to launch a tokenized wealth product on the Bybit exchange and the Mantle chain, offering access to Franklin Templeton's investment strategies.