Franklin Resources, Inc. (BEN) retrofitted its Western Asset Institutional Treasury Obligations Fund ($LUIXX) and Western Asset Institutional Treasury Reserves Fund ($DIGXX) to meet the requirements of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act and to allow distribution through blockchain‑enabled intermediaries. The retrofit makes the funds eligible as reserve‑management vehicles for stable‑coin issuers and provides institutional investors with a new on‑chain investment option that blends the liquidity and regulatory familiarity of traditional money‑market funds with the efficiency of tokenized assets.
The GENIUS Act, enacted in July 2025, mandates that payment stablecoins be backed 100 % by high‑quality liquid assets and prohibits yield payments to holders. By aligning its money‑market funds with these rules, Franklin positions itself to supply the reserve vehicles that stable‑coin issuers will need to meet regulatory compliance. The retrofits also enable the funds to be tokenized and distributed on blockchain platforms, giving clients instant settlement and programmable access to the underlying assets.
Western Asset has faced significant outflows in recent years, prompting Franklin to diversify its product mix. The retrofit is part of a broader effort to offset the drag from those outflows and to accelerate growth in higher‑margin alternative and tokenized offerings. While exact outflow figures are not disclosed, the move signals Franklin’s intent to capture a share of the expanding tokenized finance market, projected to grow from $600 billion to $19 trillion by 2033.
Distribution will occur through blockchain‑enabled intermediaries such as custodians and exchanges that support tokenized assets. These intermediaries provide the infrastructure for on‑chain trading, settlement, and regulatory reporting, allowing institutional investors to access the funds with the same risk profile as traditional money‑market products but with the speed and programmability of blockchain.
Franklin’s initiative places it among a small group of asset managers pursuing native on‑chain mutual fund tokenization. The firm’s Benji Technology Platform and its Franklin OnChain U.S. Government Money Fund demonstrate a broader commitment to digital assets. By becoming the only global asset manager delivering native on‑chain mutual fund tokenization, Franklin seeks to differentiate itself in a market that is attracting competitors such as BlackRock, Fidelity, and other fintech‑focused asset managers.
Matt Jones, Franklin Templeton’s Head of Institutional Liquidity, said the retrofits “allow us to help institutions adopt tokenized infrastructure with products they already know.” CEO Jenny Johnson added that the move is a “pivotal first year of our five‑year plan” and underscores Franklin’s leadership in the tokenization space. The retrofit is a key step in Franklin’s strategy to balance traditional money‑market offerings with innovative, higher‑margin tokenized solutions.
By retrofitting these funds, Franklin not only meets the regulatory requirements of the GENIUS Act but also positions itself to capture a growing share of the tokenized finance market, which is expected to reach $19 trillion by 2033. The move signals Franklin’s commitment to integrating blockchain technology across its investment platforms and to mitigating the impact of Western Asset outflows through new, high‑margin product offerings.
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