Bybit and Franklin Templeton Launch Off-Exchange Collateral Program for Tokenized Fund Shares

This initiative represents a significant step in integrating traditional finance with the crypto ecosystem, enhancing capital efficiency and risk management.

• Bybit and Franklin Templeton announced a collaboration on September 28, 2026, allowing institutions to use tokenized money-market fund shares as collateral.
• Eligible clients can pledge shares issued via Franklin Templeton's Benji platform, which remain in regulated custody while earning yield.
• The program aims to address institutional demand for efficient collateral mechanisms in crypto markets, especially after previous exchange failures.

• Tokenized real-world assets (RWAs) have gained traction as on-chain instruments, particularly for holding yield-bearing assets like money-market funds.
• Post-2022 exchange failures have heightened the focus on separating custody from execution to mitigate counterparty risk in crypto trading.
• Franklin Templeton's Benji platform, launched in 2021, was the first U.S.-registered mutual fund using public blockchain for recordkeeping, paving the way for this collaboration.

On September 28, 2026, Bybit and Franklin Templeton unveiled a strategic collaboration that allows eligible institutional clients to use tokenized money-market fund shares as off-exchange collateral for trading on the Bybit platform. This program utilizes shares issued through Franklin Templeton's Benji platform, which are held in regulated custody by ByCustody. The innovative structure enables institutions to maintain yield on their holdings—approximately 3.7% annualized—while accessing trading liquidity without the need to transfer assets directly onto the exchange.

This arrangement is particularly relevant in the wake of heightened institutional demand for efficient collateral mechanisms in the crypto markets, especially following the failures of several exchanges in 2022. By allowing institutions to pledge tokenized fund shares, the program effectively separates custody from execution, thereby reducing counterparty risk. This is a critical development for institutional investors who are increasingly looking for ways to engage with the crypto market while managing risk.

The Benji platform, which Franklin Templeton launched in 2021, serves as a foundational element of this collaboration. It was the first U.S.-registered mutual fund to utilize public blockchain technology for recordkeeping, setting a precedent for future tokenized financial products. The current offering allows institutions to leverage approximately $686 million in net assets represented by the Benji-issued tokenized fund shares, enhancing capital efficiency and risk management for participants.

Looking ahead, future phases of this collaboration may include the introduction of tokenized wealth products for wallet-based users on the Mantle chain, although specific details are yet to be released. This could further expand the utility of tokenized assets in the financial ecosystem, making it easier for a broader range of investors to engage with these innovative financial instruments.

• Institutional investors: They gain access to new collateral options while maintaining yield on their assets.
• Crypto exchanges: Increased liquidity and reduced counterparty risk may attract more institutional trading.
• Financial regulators: They will monitor the integration of traditional finance with crypto to ensure compliance and stability.

• Adoption rates among institutional clients: Tracking how quickly institutions begin to utilize this collateral program will indicate its success and impact on the market.
• Future product offerings from Franklin Templeton: Any announcements regarding new tokenized wealth products could signal further integration of traditional finance with crypto.
• Market reactions to liquidity changes: Observing how liquidity shifts in the crypto market as a result of this program will provide insights into its broader implications.