Franklin Templeton Moves Wall Street’s Safest Funds Closer to the Blockchain Era

Franklin Templeton is quietly laying the groundwork for what tokenized finance looks like when it is built for institutions rather than crypto natives. The asset management giant announced that two institutional money market funds managed by its affiliate Western Asset Management have been updated to operate within emerging blockchain-based financial infrastructure, marking a significant step in the convergence of traditional funds and digital settlement rails.

Rather than launching entirely new products, Franklin Templeton has chosen a more conservative and telling approach: retrofitting existing Rule 2a-7 government money market funds to function within regulated tokenized frameworks. One fund has been aligned with the reserve requirements of the GENIUS Act, the federal stablecoin law enacted in July 2025, while the other has been adapted for blockchain-enabled distribution. Together, the updates signal that tokenization is no longer an experimental add-on but a structural evolution of how institutional capital moves.

“Traditional funds are already beginning to move on-chain, so rather than question their ability, our focus is to make them more accessible and useful by many,” said Roger Bayston, Franklin Templeton’s head of digital assets. The comment reflects a broader shift in tone across asset management, where skepticism toward blockchain is giving way to pragmatic integration.

One of the updated vehicles, the Western Asset Institutional Treasury Obligations Fund, has been restructured to meet the GENIUS Act’s standards for regulated stablecoin reserves. The fund now invests exclusively in U.S. Treasuries with maturities of 93 days or less, positioning it as a compliant liquidity source for stablecoin issuers operating under the new federal framework. As the stablecoin market exceeds $310 billion in supply and forecasts point toward multi-trillion-dollar growth by the end of the decade, demand for high-quality, regulated reserve assets is accelerating.

The second fund, the Western Asset Institutional Treasury Reserves Fund, takes a different path into tokenized finance. It has introduced a new digital institutional share class designed for distribution through blockchain-enabled intermediary platforms. While the fund itself remains a traditional, SEC-registered money market fund, approved intermediaries can now use blockchain technology to record and transfer ownership. The result is faster settlement, round-the-clock transactions, and easier integration with digital cash management and collateral systems.

Franklin Templeton executives have emphasized that innovation does not need to come at the expense of risk discipline. “Being early only matters if you do it responsibly,” said Matt Jones, head of institutional liquidity at Franklin Templeton, framing the move as a way to help clients adopt tokenized infrastructure without abandoning familiar products or regulatory safeguards.

The strategy highlights a critical distinction in today’s tokenization narrative. Instead of turning funds themselves into crypto assets, Franklin Templeton is tokenizing access, settlement, and distribution. That approach preserves investor protections while allowing institutions to plug traditional vehicles into blockchain-based workflows increasingly used by banks, stablecoin issuers, and financial intermediaries.

For Franklin Templeton, which has invested in digital asset research and blockchain experimentation since 2018, the announcement reinforces its position as one of the few legacy firms translating tokenization from theory into operational finance. As regulated stablecoins and onchain settlement gain momentum, the firm’s bet is that the future of tokenized markets will be built not by replacing traditional funds, but by quietly upgrading how they move.