Franklin Templeton and Bybit Launch Tokenized Collateral Program for Institutional Investors

Franklin Templeton has partnered with Bybit to allow institutional investors to use tokenized shares from its $686 million fund as collateral for Tether (USDT) or USD Coin (USDC) credit, without moving the underlying assets onto the exchange.

The program, which is limited to eligible clients, allows investors to keep earning yield on their fund holdings while accessing USDT or USDC credit lines for trading through ByCustody. The linked Franklin OnChain U.S. Government Money Fund has about $686 million in net assets, providing a regulated and yield-bearing asset that can support trading activity.

According to Yoyee Wang, Bybit's Global Head of RWA and TradFi, institutional investors are looking for more flexible collateral options as tokenized assets become more useful in trading infrastructure. 'It's opening up the regulated investment product,' Wang said, adding that the partnership gives those investors another way to use a regulated, yield-bearing product without first moving the underlying asset onto a crypto exchange.

The SEC issued Franklin Templeton a no-action letter on August 12 under stated custody conditions, not formal Commission approval. The Bybit program follows earlier Franklin Templeton tokenized-collateral work, including an OKX arrangement with Standard Chartered and a Binance program announced in February 2026.