Franklin Templeton Prepares Institutional Money Market Funds for Tokenized Finance

Key Terms

tokenized technical

Tokenized means converting a real-world asset, like property, artwork, or stocks, into digital tokens stored on a computer network. This process makes it easier to buy, sell, or transfer small parts of the asset quickly and securely, much like dividing a property into many tiny pieces that can be traded individually. For investors, tokenization can increase access, liquidity, and flexibility in managing their investments.

stablecoin financial

A stablecoin is a type of digital currency designed to keep its value steady, often by being backed by traditional assets like money or commodities. For investors, stablecoins offer a reliable way to move money quickly across digital platforms without the value fluctuations common with other cryptocurrencies, making them useful for saving, trading, or transferring funds with less risk of sudden losses.

blockchain-based technical

"Blockchain-based" describes systems or technologies that rely on a digital ledger shared across many computers to record and verify transactions securely and transparently. Imagine a shared spreadsheet that everyone can see and update, but once a change is made, it cannot be altered without everyone’s agreement. This approach helps ensure trust and security without needing a central authority, which can be important for investors seeking reliable and tamper-proof record-keeping.

rule 2a-7 regulatory

A U.S. Securities and Exchange Commission rule that sets the operating rules for money market funds — the short-term cash pools many investors use like a checking account. It limits how risky or long-term the fund’s investments can be, requires buffers of liquid assets, and enforces stress tests and disclosure so the fund can meet redemptions. Think of it as a safety rulebook that helps keep money market funds stable and liquid, which matters to investors relying on them for low-risk cash management.

u.s. treasuries financial

U.S. Treasuries are debt securities issued by the U.S. government—short-term bills, medium-term notes, and long-term bonds—that act like a nationwide IOU investors buy to lend money to the government. They matter to investors because they are viewed as the safest benchmark asset: their yields help determine borrowing costs, benchmark interest rates, and how risky other investments look, so moves in Treasury rates can sway stock prices and portfolio decisions.

digital institutional share class financial

A digital institutional share class is a version of a company’s stock created specifically for large, professional investors and recorded in electronic form — often using blockchain or similar digital ledgers — rather than as traditional paper or conventional brokerage entries. It matters to investors because it can lower trading and custody costs, speed settlement, and restrict who can buy or sell the shares, so it changes liquidity, compliance requirements and operational risk much like a VIP digital ticket that has different rules and benefits than a standard one.

sec-registered regulatory

SEC-registered means a company or its securities are formally registered with the U.S. Securities and Exchange Commission, which requires filing detailed financial and business information and agreeing to regular reporting and oversight. For investors, registration is like a business carrying a government-issued safety sticker: it signals greater transparency, standardized disclosures and independent audits that make it easier to assess risk and compare companies.

Franklin Templeton retrofits two Western Asset funds for GENIUS Act compliance and blockchain-based distribution

SAN MATEO, Calif.--(BUSINESS WIRE)-- Franklin Templeton, a global investment leader, today announced that two institutional money market funds managed by its affiliate Western Asset Management are now eligible for use in two major segments of the evolving market for tokenized money market funds: one supporting stablecoin issuers in the regulated stablecoin reserves under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, and the other acting as a distribution product across blockchain-enabled platforms. These changes underscore Franklin Templeton’s focus on leveraging blockchain-based technologies to enhance traditional investment vehicles.

“The Western Asset Liquidity business has long focused on helping clients move forward without choosing between innovation and managing risk,” said Matt Jones, Franklin Templeton’s Head of Institutional Liquidity. “Being early only matters if you do it responsibly, and these updates prove how we can help institutions adopt tokenized infrastructure with products they already know.”

The updates apply to two existing traditional Rule 2a-7 government money market funds and are intended for Western Asset Management to continue meeting the needs of its institutional clients and distribution partners as the market for delivery of digital products evolves. These changes will enable institutional investors to use both funds more effectively across two major applications: stable reserve management and blockchain-enabled intermediary distribution.

The Western Asset Institutional Treasury Obligations Fund ($LUIXX)

• The Western Asset Institutional Treasury Obligations Fund has been updated to align with the reserve requirements of the GENIUS Act, the federal stablecoin framework signed into law in July 2025, and now invests exclusively in U.S. Treasuries with maturities of 93 days or less. The change positions the fund to support stablecoin reserve management as institutional adoption accelerates. With the stablecoin market surpassing $310 billion in total supply and projecting to reach approximately 2 trillion by 2030, demand is growing for regulated, high-quality liquidity across digital payment, settlement, and collateral platforms.

The Western Asset Institutional Treasury Reserves Fund ($DIGXX)

• The Western Asset Institutional Treasury Reserves Fund introduced a new Digital Institutional Share Class ($DIGXX) designed for distribution through blockchain-enabled intermediary platforms. The update allows approved intermediaries to leverage blockchain technology for recording and transferring fund share ownership. This provides faster settlement, 24/7 transactions, and easier integration with digital collateral and cash management systems, while the fund itself remains a traditional, SEC-registered money market fund. As interest in tokenized funds grows, this approach reflects how asset managers are adapting fund distribution to meet institutional demand for regulated products that work within digital market infrastructure.

“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, Head of Digital Assets at Franklin Templeton. “By prioritizing interoperability and flexibility, we’re opening more ways for clients to access and deploy regulated funds across the platforms they rely on, giving investors greater choice in how they put their capital to work.”

Franklin Templeton is a pioneer in digital asset investing and blockchain innovation, combining tokenomics research, data science, and technical expertise to deliver cutting-edge solutions since 2018. Learn more at Franklin Templeton Digital Assets.

About Franklin Templeton

Franklin Templeton is a trusted investment partner, delivering tailored solutions that align with clients’ strategic goals. With deep portfolio management expertise across public and private markets, we combine investment excellence with cutting-edge technology. Since our founding in 1947, we have empowered clients through strategic partnerships, forward-looking insights, and continuous innovations – providing the tools and resources to navigate change and capture opportunity.

To learn more, visit franklintempleton.com and follow us on LinkedIn.

Franklin Resources, Inc. [NYSE:BEN]

Risks

You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor is not required to reimburse the fund for losses, and you should not expect that the sponsor will provide financial support to the fund at any time, including during periods of market stress. Although the fund invests in U.S. government obligations, an investment in the fund is neither insured nor guaranteed by the U.S. government.

All investments involve risk, including loss of principal. There are risks associated with the issuance, redemption, transfer, custody, and record keeping of shares maintained and recorded primarily on a blockchain. For example, shares that are issued using blockchain technology would be subject to risks, including the following: blockchain is a rapidly-evolving regulatory landscape, which might result in security, privacy or other regulatory concerns that could require changes to the way transactions in the shares are recorded. The fund's yield may be affected by changes in interest rates and changes in credit ratings. These and other risks are discussed in the fund’s prospectus.

Before investing, carefully consider a fund’s investment objectives, risks, charges and expenses. You can find this and other information in each prospectus, or summary prospectus, if available, at www.franklintempleton.com. Please read it carefully.

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Media Relations:

Franklin Templeton

Rebecca Radosevich (212) 632-3207

rebecca.radosevich@franklintempleton.com

Source: Franklin Templeton