Bybit Partners with Franklin Templeton to Enable Tokenized Fund Shares as Collateral for Institutions

This collaboration marks a significant step in integrating traditional finance with cryptocurrency, addressing institutional needs for safer trading mechanisms.

• On September 28, 2026, Bybit announced a partnership with Franklin Templeton to allow institutions to use tokenized fund shares as collateral.
• Eligible institutions can pledge these shares via ByCustody, maintaining custody while accessing trading credit lines in USDT or USDC.
• This initiative aims to improve capital efficiency and reduce counterparty risk in crypto derivatives trading.

• Tokenized real-world assets (RWAs) are gaining traction as institutions seek yield-bearing instruments backed by regulated assets.
• Previous exchange failures have heightened the focus on off-exchange custody solutions to mitigate risks associated with counterparty exposure.
• Franklin Templeton's Benji platform, launched in 2021, is the first U.S.-registered mutual fund utilizing public blockchain for recordkeeping, paving the way for this collaboration.

On September 28, 2026, Bybit and Franklin Templeton announced a strategic collaboration that allows eligible institutional clients to use tokenized money-market fund shares as off-exchange collateral. This innovative approach enables institutions to pledge their Benji-issued tokenized shares via ByCustody without transferring the assets to Bybit. Instead, Bybit mirrors the collateral value internally, granting institutions access to trading credit lines in USDT or USDC while the underlying assets remain in regulated custody and continue to generate yield.

This structure is particularly appealing in the wake of previous incidents involving exchange failures, which have raised concerns about counterparty risk in the crypto derivatives market. By allowing institutions to maintain custody of their assets, this partnership effectively reduces their exposure to exchange-related risks while preserving the returns generated by their funds. The latest seven-day annualized yield on the Franklin OnChain U.S. Government Money Fund (BENJI token) stands at 3.7%, making it an attractive option for institutions seeking yield.

The collaboration is just the first phase of a broader partnership that aims to explore additional tokenized products for wallet users on Bybit and the Mantle network. This could potentially lead to a wider range of investment options for both institutional and retail clients, further integrating traditional finance with the evolving crypto landscape.

Bybit's global headquarters in Dubai positions it strategically to serve institutional clients, particularly those based in the UAE. The regulatory environment under the Virtual Assets Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA) in Dubai provides a supportive framework for these types of innovations. As institutions increasingly seek flexible collateral options amid the growing adoption of RWAs, Bybit's initiative could set a precedent for other exchanges and financial institutions.

• Institutional investors looking for safer collateral options in crypto trading.
• Asset managers who can leverage tokenized assets for improved capital efficiency.
• UAE-based financial institutions benefiting from Dubai's regulatory environment.

• Adoption rates of tokenized collateral: Monitor how quickly institutions begin to utilize this new collateral option, as it could indicate broader acceptance of tokenized assets.
• Regulatory responses: Keep an eye on any regulatory developments from UAE or U.S. authorities regarding this partnership and its implications for the crypto market.
• Expansion of tokenized products: Watch for announcements regarding additional tokenized offerings from Bybit and Franklin Templeton, which could further enhance the utility of RWAs in trading.