Asset management giant Franklin Templeton has expanded its tokenized money market infrastructure to Bybit, allowing eligible institutional clients to pledge Benji-issued fund shares as off-exchange collateral while continuing to earn yield — a structure that could reshape how professional traders use exchange credit.
By David Chen | September 28, 2026
The Hook: Your Money Market Fund, But It Trades
Announced on September 28, the first program connects Franklin Templeton’s Benji Technology Platform to ByCustody and Bybit’s trading infrastructure. In plain terms: institutional clients can deposit tokenized shares of a U.S. government money market fund, keep them safely in custody off the exchange, and still use their value as backing for trading credit lines denominated in USDT or USDC. It is like parking your savings in a government bond fund, then using the account statement as proof of assets to borrow against — except here the whole process runs on blockchain rails.
The numbers involved are substantial. The Franklin OnChain U.S. Government Money Fund, known as FOBXX, held 686.64 million USD in net assets as of August 31, according to Franklin Templeton’s own reports. Each share of the fund is represented by one BENJI token on Franklin Templeton’s blockchain-integrated recordkeeping platform.
On-Chain Evidence: How the Collateral Actually Works
The structure matters more than the announcement. ByCustody describes its off-exchange setup as a model where assets remain in custody while a mirror-mapping layer supports trading access. The tokenized assets never leave secure custody — instead, their value is mirrored into the client’s Bybit trading environment. This is the key safety feature, and it addresses the industry’s oldest fear: funds sitting on an exchange can be lost if that exchange fails or is hacked.
- 686.64 million USD — net assets of the FOBXX tokenized fund as of August 31
- 3.57 percent — the fund’s latest published seven-day current yield, as of September 16
- 3.63 percent — the fund’s seven-day effective yield over the same period
- USDT or USDC — the trading credit lines the collateral can support
Eligible investors keep receiving fund yield while their collateral backs trading activity — a double benefit that traditional margin accounts cannot offer. The fund itself invests primarily in U.S. government securities, cash and repurchase agreements, making it one of the most conservative instruments in crypto-adjacent finance.
The Core Conflict: Yield and Safety Versus Counterparty Risk
Every crypto user remembers the exchanges that collapsed with customer funds locked inside. That history is exactly why off-exchange collateral models are gaining traction. Under this arrangement, Franklin Templeton’s tokenized fund shares never actually sit on Bybit’s balance sheet. If something went wrong at the exchange, the collateral would remain in custody, outside the bankruptcy estate — at least in theory, since these structures remain relatively new and untested in a major failure scenario.
Yoyee Wang, Bybit’s global head of RWA and TradFi, said institutional investors increasingly expect flexibility and risk controls similar to those used in traditional markets, and that the expanded collateral options are intended to let clients deploy capital while retaining exposure to regulated investment products. Franklin Templeton has previously launched comparable off-exchange Benji collateral arrangements with Binance and other crypto platforms globally, so Bybit is an expansion of a proven playbook rather than an experiment.
Market Implications: Tokenized Funds Are Becoming Financial Plumbing
For the broader market, the significance is the direction of travel. A trillion-dollar asset manager is not treating tokenization as a novelty — it is wiring tokenized funds directly into the plumbing of major crypto exchanges. When money market shares can serve as trading collateral, the boundary between traditional finance and crypto liquidity blurs further.
There is more to come. Bybit and Franklin Templeton also plan a wallet-based tokenized wealth product using the Mantle blockchain network, according to the announcement. That would extend the partnership beyond collateral into direct distribution of tokenized investment products.
The Verdict
For everyday investors, this deal will not change your wallet today — the program targets eligible institutions. But it signals where the industry is heading: regulated, yield-bearing tokenized assets are becoming the collateral of choice for serious trading firms, reducing the amount of raw cash and crypto parked on exchanges. That is a structural safety improvement for the entire market. The trend Franklin Templeton started with Binance now includes Bybit, and each new venue makes tokenized collateral a standard rather than an exception.
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
earning 3.57 percent on a gov money fund AND using it as bybit collateral at the same time. tradfi finally shipping something useful lol
3.57 percent on a gov money fund while it backs a USDT credit line, and the shares never leave custody. That yield alone beats what most traders park as idle exchange margin. Institutions got the good toy first as usual.
3.57 percent on collateral is nice until the credit line gets called mid wobble and yield is the last thing anyone counts. good pilot though, direction is right
The mirror-mapping custody model is the real story here. Assets never touch the exchange, which is the exact thing FTX made us all paranoid about.
agreed, 686 million in FOBXX is peanuts for franklin tho. this is a pilot before they tokenize the rest of the shelf, watch
peanuts for the balance sheet sure, but the collateral leg only works if exchanges keep accepting benji valuations daily. that is the actual test, not the fund size
Franklin routing this through Bybit first instead of a prime broker is the interesting bit. If off-exchange collateral becomes standard for derivatives margin, that 687 million dollar Benji pilot turns into a blueprint every asset manager copies within two years.
funny how the tradfi giants ended up shipping the actually crypto native primitive. off exchange collateral that keeps earning yield, credit where due
Pledging tokenized money market shares as Bybit collateral while still collecting the yield is genuinely clever. That 687 million dollar fund quietly became trading margin.
clever until a margin call hits during a treasury market wobble and someone is unwinding fund shares at 4am to meet a usdt line
The Benji shares sit in ByCustody off exchange, so a margin call means the collateral unwinds through the mirror mapping. You are right that the speed of that unwind is untested. First real stress event will be the exam.
the unwind speed question is the whole risk model in one line. benji redemption takes a day, margin calls do not
the 4am unwind scenario is the whole tail risk. benji settles on a fund timeline, margin clocks run in minutes, someone eats that gap eventually
thats what the mirror mapping is supposedly for, the pledge releases happen on chain. but agreed, nobody has stress tested it during a real treasury wobble
Franklin keeps shipping the boring infrastructure everyone else gives keynotes about. Benji on public chains, now off exchange collateral. respect
boring infrastructure is exactly what gets adopted quietly. every prime broker pitch deck is getting rewritten this week
first program is 687 mil but the shelf behind it is billions. if bybit makes this work the other offshore venues have to answer or lose the institutional flow
the copycat wave is the easy part, every offshore venue will want a tokenized collateral story by q2. daily benji valuations at 3am is where it gets fun