Key points

• Bybit users can pledge Franklin Templeton tokenized money market fund shares as collateral to borrow USDT or USDC.
• The shares represent about $686 million in net assets, according to a Monday press release.
• Underlying assets are held off-exchange by regulated custodian ByCustody, with value mirrored inside Bybit.
• The shares are issued via Franklin Templeton's Benji Technology Platform, which pays a 3.7% annualized yield on the latest seven-day rate.
• Franklin Templeton already offers similar off-exchange collateral arrangements to Binance and OKX customers.

Franklin Templeton has brought its tokenized collateral service to Bybit, letting the exchange's users pledge shares in its tokenized money market funds as backing for crypto trading, CoinDesk reports. The digital asset-friendly institution said the arrangement covers shares representing roughly $686 million in net assets, according to a Monday press release.

The tokenized collateral service lets investors and wallet holders on Bybit pledge those shares to borrow the stablecoins USDT or USDC, while continuing to earn yield on the underlying assets. The key feature is that users do not have to move the underlying assets onto the exchange. Instead, the regulated custody platform ByCustody holds them off-exchange, and their value is mirrored inside Bybit's trading environment. That structure, the release said, allows yield generation while unlocking trading liquidity.

The shares are issued through the Benji Technology Platform, Franklin Templeton's proprietary blockchain-integrated record keeping and transfer agency infrastructure. Benji currently pays a 3.7% annualized yield, based on the latest seven-day rate cited by the firm.

Bybit users pledge fund shares

This is not Franklin Templeton's first such arrangement. The firm already offers its tokenized money market funds to customers of Binance and OKX, and the Bybit deal continues its buildout of collateral mirroring across the crypto market. Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton, said the work opens up new opportunities for the sector.

In an interview, Kaul said an investor can now look across the top exchanges and use collateral more optimally while earning yield on it. She described that as a critical unlock for the ecosystem's growth, and said it is also an opportunity for the asset manager to design products specifically for the wallet-based investing channel.

The move reflects a wider industry pattern in which crypto platforms accept tokenized funds as collateral for trades. Crypto.com and Deribit, for example, allow eligible institutional and professional users to use BlackRock's BUIDL fund to back trades, including derivatives positions, according to CoinDesk.

Assets stay in custody

For Bybit, the partnership adds a yield-bearing form of collateral without requiring assets to leave regulated custody, which may appeal to users weighing trading flexibility against counterparty risk. For Franklin Templeton, it widens the reach of its tokenized fund products across major exchanges as tokenized money market funds become more common in crypto trading.

Read the full article on CoinDesk →