Bybit and Franklin Templeton are bringing tokenized money market funds deeper into digital-asset trading infrastructure through a new off-exchange collateral program. Eligible institutional clients can pledge Franklin Templeton’s Benji-issued fund shares through ByCustody to obtain USDT or USDC trading credit on Bybit while the underlying assets remain in custody, creating another use case for tokenized real-world assets beyond simply holding or transferring them on-chain.

Tokenized money market funds are beginning to move from digital representations of traditional investments into functional components of trading and collateral infrastructure.

Bybit and Franklin Templeton have announced a strategic collaboration that allows eligible institutional clients to use tokenized money market fund shares as collateral for trading on Bybit without transferring the underlying assets onto the exchange.

The shares are issued through Franklin Templeton’s Benji Technology Platform, its blockchain-integrated infrastructure for recording and transferring tokenized investment products. Eligible investors can pledge Benji-issued shares through ByCustody, Bybit’s institutional custody platform, and receive trading credit lines denominated in USDT or USDC.

The underlying tokenized fund assets remain in off-exchange custody while their value is mirrored within Bybit’s trading environment. That structure allows investors to maintain exposure to the yield-generating money market fund while using the assets to support trading activity.

The distinction is important for institutional investors. Traditional collateral arrangements can require assets to be transferred to a venue or intermediary, creating additional custody and counterparty considerations. An off-exchange model separates custody of the investment from the trading venue while still making the asset economically useful as collateral.

The development also extends the utility of real-world asset (RWA) tokenization. Tokenized funds have often been positioned around faster settlement, transparency and digital distribution. Using tokenized fund shares as collateral adds another layer: the asset can become part of a broader financial workflow involving custody, credit and trading.

Franklin Templeton’s Benji infrastructure is already one of the more established examples of institutional fund tokenization. The firm’s Franklin OnChain U.S. Government Money Fund, represented by the BENJI token, launched in 2021 and uses blockchain technology for recording fund share ownership. Franklin Templeton reported that the Benji suite represented $1.98 billion in assets under management as of April 29, 2026.

The broader tokenized-money market is also moving toward more sophisticated financial applications. McKinsey has identified tokenized money market funds as an early tokenization use case and has highlighted their potential for 24/7 settlement, composability and use as payment or collateral instruments.

Bybit’s arrangement follows an earlier institutional program between Franklin Templeton and Binance, announced in February 2026, which similarly allowed eligible clients to use Benji-issued money market fund shares as off-exchange collateral while keeping the assets in regulated custody.

The Bybit collaboration therefore represents an expansion of an emerging market structure rather than an isolated experiment. The key change is that a regulated investment product can remain outside a trading venue while its tokenized representation supports activity inside a digital-asset market.

That model could have implications for digital payments platforms, embedded finance infrastructure and institutional blockchain financial technology. As tokenized assets become more interoperable with trading and settlement systems, the line between an investment asset and a financial-services primitive becomes less distinct.

The arrangement also highlights the growing role of stablecoins in institutional trading. USDT and USDC function as the credit currencies in the initial program, effectively connecting a tokenized traditional investment product to stablecoin-based liquidity.

This creates a multi-layer financial architecture: the underlying asset is a regulated money market fund; blockchain infrastructure provides its digital representation and transfer mechanism; custody keeps the asset outside the exchange; and stablecoins provide trading liquidity.

For institutional investors, that architecture is primarily about capital efficiency. An investor does not necessarily have to sell a yield-bearing asset to obtain trading liquidity. Instead, the asset can remain invested while supporting another financial activity, subject to the program’s eligibility, collateral and risk requirements.

For fintech infrastructure providers, it illustrates why tokenization is increasingly being evaluated on utility rather than issuance alone. The value proposition is not simply that a traditional fund has been placed on a blockchain. It is that the token can interact with other financial infrastructure in ways that conventional fund shares may not support as easily.

Franklin Templeton is also extending the collaboration beyond institutional collateral. The companies said they plan to develop a tokenized wealth product on the Bybit exchange and Mantle chain, while educational initiatives will introduce wallet-based retail investors to traditional investment strategies, including goals-based investing and diversification.

That second component points toward a broader convergence between WealthTech and digital-asset platforms. Crypto-native wallets and exchanges are increasingly becoming distribution channels for tokenized traditional investments, while established asset managers are building blockchain infrastructure to make those products accessible in digital environments.

The competitive landscape includes tokenized Treasury and money market products from firms such as BlackRock, WisdomTree and Franklin Templeton, alongside blockchain-native issuers. McKinsey estimates that the tokenized asset market could reach about $2 trillion by 2030, excluding cryptocurrencies and stablecoins, although estimates vary significantly by adoption assumptions.

The next stage will depend on whether tokenized assets can connect reliably to custody, lending, collateral management, payments and trading systems. Bybit and Franklin Templeton’s latest program is an example of that infrastructure becoming more interconnected.

Rather than treating tokenization as a new wrapper for existing securities, financial institutions are increasingly testing whether those digital representations can become building blocks for entirely new market workflows.

Market Landscape

Tokenized real-world assets are moving from issuance and settlement toward collateral, financing and portfolio-management applications. McKinsey identifies money market funds, bonds, cash and deposits among asset classes with relatively strong potential for tokenization because blockchain infrastructure can introduce programmability, composability and faster settlement.

Franklin Templeton’s Benji platform is part of this institutional shift. Its tokenized money market fund had become a multibillion-dollar platform by April 2026, while partnerships with trading and payments infrastructure providers are extending the range of activities that tokenized fund shares can support.

The competitive question is now moving beyond who can tokenize an asset to who can make that asset usable across custody, collateral, trading and settlement networks.

Top Insights

• Bybit will allow eligible institutions to use Benji-issued tokenized money market fund shares as off-exchange collateral for USDT and USDC trading credit.
• The underlying assets remain in custody rather than moving onto Bybit, separating investment custody from trading liquidity.
• Franklin Templeton’s Benji suite represented $1.98 billion in assets under management as of April 2026.
• The collaboration expands tokenized funds from investment and settlement products into collateral and capital-efficiency infrastructure.
• Bybit and Franklin Templeton also plan tokenized wealth products and education initiatives for wallet-based investors.

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