In 2021, Franklin Templeton introduced a money market fund that used a public blockchain to record transactions. Roger Bayston, head of digital assets at Franklin Templeton, told Blockworks the company is working with the SEC to unlock “a rich set of features” that blockchain tech enables for mutual funds, including efficiency gains and, in turn, potential lower fees.
The $1.4 trillion asset manager’s OnChain U.S. Government Money Fund, which trades on the Nasdaq under the ticker (FOBXX), had more than $290 million in assets under management as of May 31. The fund invests more than 99% of its assets in US government securities, cash, and repurchase agreements collateralized by such assets. It also tries to maintain a stable $1 share price. One share of the fund is represented by one BENJI token, and token holders can access the fund in digital wallets through the Benji Investments app. Franklin Templeton does know-your-customer (KYC) and anti-money laundering (AML) checks while onboarding users.
Though BENJI is not a stablecoin, Bayston explained, its regulatory construct — which seeks to keep its net asset value stable — allows it to act as one while also generating income. “Investors are waking up to the opportunity that there’s probably, on a forward basis, going to be an array of on- and off-ramps for you to be able to utilize in and out of digital assets,” he said.
Blockchain technology is set to be “transformational” for other capital markets going forward, Bayston said. While NFTs are often thought of as digital art, Bayston said, each individual loan issued in the economy could be an NFT. “I would question whether this Wall Street machine of securitization isn’t somehow transformed by blockchain, because through smart contracts I don’t have to pool a whole bunch of loans and then apply that cash flow structure,” Bayston added.
Bayston’s comments come after Mike Muir, Franklin Templeton’s head of digital assets technology, told Blockworks last December the firm was exploring NFT use cases. The company issued NFTs to attendees of its first Innovation Forum held in September. Traditional finance players have expressed that they understand the potential of tokenization.
WisdomTree is getting set to debut “blockchain-enabled funds” that utilize the Stellar blockchain on its upcoming financial app. Private markets investment firm Hamilton Lane first revealed last year it would be tokenizing several of its funds using Polygon and potentially other public chains. BlackRock CEO Larry Fink said in a letter to investors in March that the tokenization of assets could offer various opportunities, including “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”
Source: Blockworks
