Franklin Templeton’s tokenized collateral service unlocks $686M for Bybit users

Franklin Templeton is rolling out its tokenized collateral service to a new corner of the crypto trading world, letting Bybit users pledge shares in the asset manager’s tokenized money market funds to unlock stablecoin credit lines while still earning yield on the underlying holdings. The move, reported by CoinDesk, extends a collateral model Franklin Templeton has already tested with other major exchanges, and it signals that tokenized fund shares are becoming a more routine part of how crypto traders manage margin and liquidity.

Key takeaways

• Franklin Templeton is expanding its off-exchange collateral program to Bybit, letting users pledge tokenized money market fund shares as trading collateral.
• The shares available for this purpose represent about $686 million in net assets.
• Regulated custody platform ByCustody holds the underlying assets off-exchange, while their value is mirrored inside Bybit’s trading environment.
• The shares are issued through Franklin Templeton’s proprietary Benji Technology Platform, which currently pays a 3.7% annualized yield based on the latest seven-day rate.
• Franklin Templeton already runs similar off-exchange collateral arrangements with Binance and OKX.

Franklin Templeton extends tokenized collateral service to Bybit

Franklin Templeton’s latest deal brings its tokenized collateral service directly into Bybit’s trading infrastructure, opening the door for the exchange’s investors and wallet holders to put idle fund shares to work. According to the press release cited by CoinDesk, users can pledge shares representing roughly $686 million in net assets as collateral to borrow stablecoins USDT or USDC, all while continuing to earn yield on those same underlying assets.

How the partnership works

In practice, the arrangement lets a Bybit user hold a stake in Franklin Templeton’s tokenized money market fund and use that stake as leverage for trading, rather than selling the position outright or transferring it into a separate wallet. That structure matters for active traders: it turns a yield-bearing asset into usable collateral without forcing a choice between earning returns and having liquidity on hand.

Underlying asset custody via ByCustody

The key detail, as CoinDesk noted, is that the underlying shares never actually move onto Bybit. Instead, the regulated custody platform ByCustody keeps the assets off-exchange, and their value is simply mirrored inside Bybit’s trading environment. This is designed to enable yield generation on the original holding while still unlocking trading liquidity for the user on the exchange side, according to the release.

Technology and yield features behind the service

Behind the collateral mechanics sits Franklin Templeton’s own infrastructure for tracking who owns what, and that infrastructure is what makes the yield component possible in the first place.

Benji Technology Platform issuance

The tokenized shares used in the Bybit arrangement are issued through the Benji Technology Platform, described by CoinDesk as Franklin Templeton’s proprietary blockchain-integrated record keeping and transfer agency infrastructure. Benji effectively acts as the backbone that tracks ownership of the tokenized fund shares and keeps that record synced with blockchain-based systems.

Yield rate and trading liquidity integration

On the returns side, Benji currently pays a 3.7% annualized yield, based on the latest seven-day rate, per the CoinDesk report. Combined with the mirrored-value setup on Bybit, that means a user’s tokenized holding keeps generating yield even as its value is being used to back a trading position. This is the part of the service that turns a passive fund investment into something closer to working capital for crypto trading.

Industry context and expert insights

Bybit is not the first exchange to plug into this kind of arrangement, and the broader pattern says a lot about where tokenized fund products are headed next.

Broader adoption of tokenized collateral in crypto

Franklin Templeton already offers its tokenized money market funds to customers of Binance and OKX under similar off-exchange collateral programs, according to CoinDesk. Other platforms are adopting a similar approach, as Crypto.com and Deribit both let qualifying institutional and professional clients rely on BlackRock’s BUIDL fund as collateral for trades, including derivatives positions. Taken together, these deals suggest tokenized money market shares are steadily becoming an accepted form of trading collateral across multiple major venues rather than a one-off experiment.

Sandy Kaul’s perspective on ecosystem growth

Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton, framed the Bybit expansion as part of a continuing buildout of collateral mirroring across the crypto space. “So now I’m able to really look across the top exchanges and be able as an investor to use my collateral more optimally while earning yield on it,” Kaul said in an interview cited by CoinDesk. “That to me is a critical unlock to really allow the ecosystem to grow. It’s also a wonderful opportunity for us as an asset manager to be designing products specifically for this wallet-based investing channel.”

That last point is worth sitting with. Kaul isn’t just describing a technical integration — she’s pointing to a shift in how asset managers think about distribution, building products around wallet-based access rather than traditional brokerage accounts. For an institution like Franklin Templeton, that reframing matters as much as any single exchange partnership, since it hints at a future where tokenized fund shares are designed from the outset to move seamlessly between custody, exchanges and trading desks.

FAQ

What assets can users pledge as collateral on Bybit through Franklin Templeton’s program?

Users can pledge shares in Franklin Templeton’s tokenized money market funds representing about $686 million in net assets.

How are the underlying assets managed when used as collateral in this program?

The underlying assets are held off-exchange by the regulated custody platform ByCustody, with their value mirrored on Bybit.

What technology platform issues Franklin Templeton’s tokenized shares?

The shares are issued via Franklin Templeton’s proprietary Benji Technology Platform, which integrates blockchain record keeping.

What yield can investors expect from using Franklin Templeton’s tokenized collateral service?

The Benji Technology Platform currently offers a 3.7% annualized yield based on the latest seven-day rate.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.