Franklin Templeton Launches Blockchain Fund for Peer-to-Peer Trading

In a forward-thinking move that could reshape the investment landscape, Franklin Templeton has announced a groundbreaking initiative that leverages blockchain technology to enhance the liquidity and accessibility of fund shares for investors. The prominent asset manager has introduced the capability for investors to transact shares of its Nasdaq-listed OnChain U.S. Government Money Fund (FOBXX) directly with one another. This innovative step is facilitated through the use of the BENJI token, which represents a share of the fund on a public blockchain platform.

Launched in 2021, FOBXX presents investors with exposure to U.S. government securities, cash equivalents, and repurchase agreements, initially utilizing the Stellar blockchain for operations. In a strategic move to broaden its technological foundation and appeal, the fund transitioned to also be available on Polygon, supporting the ecosystem of the digital currency MATIC. With $360 million in assets under management, FOBXX distinguishes itself as the first U.S.-registered fund of its kind to adopt blockchain for transaction processing and share ownership administration.

The adoption of blockchain technology aims to streamline the process of buying and selling shares, creating a more efficient financial marketplace. Franklin Templeton’s leadership in digital innovation is evidenced by their commitment to integrating these sophisticated technologies with traditional financial assets. As Roger Bayston, the head of digital assets at Franklin Templeton, conveyed, the aspiration is for blockchain-based assets like the Franklin OnChain U.S. Government Money Fund to seamlessly integrate with the broader digital asset ecosystem.

This initiative by Franklin Templeton sets a precedence in the realm of tokenized assets on Wall Street, coming on the heels of BlackRock’s introduction of its first tokenized asset fund, BUIDL, operating on the Ethereum blockchain. The enthusiasm for blockchain technology is palpable among industry leaders, with Franklin Templeton’s CEO Jenny Johnson recognizing its potential to unlock novel investment opportunities.

The move comes at a time when regulatory bodies are cautiously navigating the adoption of blockchain in financial services. The Securities and Exchange Commission (SEC), for instance, is taking deliberate steps in evaluating proposals for Ethereum spot ETFs from entities like Franklin Templeton and Grayscale. Despite the uncertain trajectory for approval, the interest in such innovations underscores a growing acknowledgment of digital assets’ significance in the financial sector.

Franklin Templeton’s venture into blockchain-enabled fund share transactions marks a pivotal moment in the convergence of traditional finance and digital innovation, potentially heralding a new era of investment opportunities and operational efficiencies.

*Edited by Ryan Ozawa.*