Bybit and Franklin Templeton announced a strategic collaboration Monday to expand institutional and retail access to tokenized investing, starting with a program that lets eligible clients use tokenized money market fund shares as trading collateral.

Under the arrangement, eligible clients can pledge shares of Franklin Templeton's tokenized fund, issued through its Benji Technology Platform, as off-exchange collateral to access USDT or USDC trading credit lines on Bybit. The underlying assets stay in custody through ByCustody, an institutional custody platform, while their value is mirrored in Bybit's trading environment, letting clients keep earning yield on their holdings while using them to support trading.

"As institutional adoption of digital assets accelerates, investors increasingly expect the same flexibility, capital efficiency, and risk management standards they are accustomed to in traditional markets," said Yoyee Wang, global head of RWA and TradFi at Bybit. "By expanding the range of high-quality collateral available through our off-exchange infrastructure, we are helping clients deploy capital more effectively while maintaining exposure to trusted, regulated investment products."

Franklin Templeton, which manages $1.7 trillion in assets, said the deal builds on its Benji platform, the blockchain-integrated recordkeeping and transfer-agency system behind its tokenized Franklin OnChain US Government Money Fund. The fund held $686.6 million in net assets as of Aug. 31, according to crypto.news, which reported that Franklin Templeton struck a similar off-exchange collateral arrangement with Binance in February.

"Tokenization continues to reshape finance, and we're excited to partner with Bybit to increase access to actively managed retail investment solutions that meet the evolving needs of the wallet ecosystem," said Sandy Kaul, head of digital assets and innovation at Franklin Templeton. "For institutions, extending connectivity of the Benji Technology Platform to Bybit offers a trusted venue to put regulated, yield-bearing assets to work in digital markets."

The collaboration also extends to retail, wallet-based investors, with a planned tokenized wealth product on the Bybit exchange and the Mantle blockchain that would provide access to Franklin Templeton investment strategies. The companies said Bybit and Mantle will share further details separately, and that Franklin Templeton and Bybit also plan digital content and education initiatives on goals-based investing and diversification for wallet-based investors.

Tokenization draws institutional interest

Franklin Templeton's tokenized fund suite has grown rapidly since Benji launched in 2021. By April, the number of BENJI investors had grown more than 140% from April 2024, with cumulative peer-to-peer transfer volume surpassing $211 million, according to a Franklin Templeton and Stellar Development Foundation release marking the platform's fifth anniversary.

The Bybit deal comes as large institutional investors, including Canadian pension funds, weigh renewed exposure to blockchain-based infrastructure after retreating from crypto following the 2022 FTX collapse. Benefits and Pensions Monitor has reported that Canadian funds are moving cautiously, focusing on custody and settlement infrastructure rather than volatile tokens themselves, as regulators including the Office of the Superintendent of Financial Institutions develop guidance for crypto-asset exposure. OSFI has said it expects to finalize its crypto-asset capital and liquidity guideline for federally regulated institutions, with implementation expected in late 2026 or January 2027, depending on an institution's fiscal year-end.

Bybit, which describes itself as a financial platform trusted by more than 80 million users worldwide, said the collateral program adds to a suite of institutional infrastructure intended to reduce counterparty exposure and improve capital efficiency for treasury management.