Franklin Templeton Updates Its Money Funds for Tokenized Finance and Stablecoins

Instead of creating new crypto products entirely, Franklin Templeton redesigned two of its institutional money market funds to operate within frameworks of tokenized finance and regulated stablecoins. This initiative allows funds to operate on blockchain platforms while remaining fully compliant, providing institutional investors with familiar treasury management tools that can now be used for on-chain liquidity and stablecoin reserve management.

Adapting traditional funds to digital finance

The updates relate to funds overseen by Franklin Templeton affiliate Western Asset Management, allowing institutional clients to use their traditional money market instruments on digital finance platforms and within regulated stablecoin frameworks. These changes apply specifically to two government Rule 2a-7 money market funds, helping Western Asset continue to support its institutional clients and distribution partners in the face of growing demand for digitally delivered financial products.

Among these funds, the Western Asset Institutional Treasury Obligations Fund ($LUIXX) was redesigned to meet the requirements of the American GENIUS Actwhich became law last July and defines the assets eligible to guarantee regulated stablecoins. The fund now invests only in short-term U.S. Treasury securities with maturities capped at 93 days, making it suitable for use as a stablecoin reserve.

Additionally, the Western Asset Institutional Treasury Reserves Fund ($DIGXX) has been redesigned for use via secure digital platforms. Approved partners can now register and transfer fund shares on-chain, facilitating faster settlement times, around-the-clock transactions and better coordination with existing financial operations. Despite these technological advances, the fund continues to operate as a traditional money market vehicle.

Bridging the gap between traditional finance and stablecoin innovation

Reflecting this shift towards digital innovation, Roger Bayston, Head of Digital Assets at Franklin Templeton, highlighted that the company anticipates that stablecoin reserves will be managed in both tokenized and traditional forms. He also discussed the growing opportunities for institutions to manage these reserves through a single entity or multiple entities as they roll out their own digital tokens.

Bayston also noted that major stablecoins tend to secure their value with conventional, low-risk instruments “rather than native, fully digital setups,” citing Wyoming’s FRNT stablecoin. Franklin Templeton aims to support these initiatives by applying its investment know-how, helping to connect traditional financial practices with new digital technologies.

The decision to readjust existing funds was deliberate. Bayston has described these changes as progressivenoting that Western Asset's Treasury fund required only minor modifications to meet GENIUS Act standards and align with the company's on-chain offering. With these foundations established, Franklin Templeton is making its new digital stock class widely accessible through a network of approved partners, including banks, brokers and other intermediaries deploying blockchain-based platforms, rather than tying it to a single system.

These updates follow a trend among large asset managers adapting to digital finance. JPMorgan recently launched a tokenized money market fund on Ethereum, while BlackRock announced in October 2025 that it would adjust a Treasury money market fund to serve as an approved reserve for US stablecoin issuers.