Franklin Templeton Updates Money Market Funds for Blockchain and Stablecoin Use

Franklin Templeton has updated two institutional money market funds to support emerging tokenized finance and stablecoin use cases. The changes apply to funds managed by its affiliate Western Asset Management. The firm aims to help institutional clients deploy familiar cash vehicles across blockchain-enabled platforms.

One of the updated funds, the Western Asset Institutional Treasury Obligations Fund, now meets reserve requirements under the U.S. GENIUS Act. It invests exclusively in U.S. Treasuries with maturities of 93 days or less, making it eligible for use as stablecoin reserves.

The second fund, the Western Asset Institutional Treasury Reserves Fund, introduced a new digital institutional share class. This allows approved intermediaries to use blockchain infrastructure for recording and transferring fund share ownership. The changes aim to support faster settlement, 24/7 transactions, and easier integration with digital collateral systems.

Why Did This Happen?

Franklin Templeton's updates reflect the growing interest in integrating blockchain technology with traditional financial products. The firm emphasizes the importance of maintaining regulatory compliance while enabling new use cases. By adapting existing funds, Franklin Templeton aims to provide institutions with on-chain access without launching entirely new crypto-native products.

The firm's Head of Digital Assets, Roger Bayston, stated that traditional funds are already beginning to move on-chain. The goal is to make these funds more accessible and useful for institutions. This approach prioritizes interoperability and flexibility, opening more ways for clients to deploy regulated funds across platforms according to industry reports.

How Did Markets React?

The stablecoin market has grown rapidly, with total supply surpassing $310 billion. Projections indicate that the market could reach approximately $2 trillion by 2030. This growth is driving demand for high-quality, regulated liquidity across digital payment and collateral systems according to market analysis.

Franklin Templeton's updates are part of a broader trend in the financial industry. Other major firms, including JPMorgan and BlackRock, have also explored tokenized money market funds. These moves highlight the increasing interest in blockchain infrastructure for traditional investment vehicles as industry reports show.

What Are Analysts Watching Next?

Analysts are closely monitoring how tokenized funds might affect the existing investment landscape. Some, like Bloomberg ETF analyst Eric Balchunas, suggest that while blockchain infrastructure may offer efficiency improvements, it is unlikely to disrupt the ETF industry in the near term. The ETF market has shown resilience and growth over the past three years according to market data.

Franklin Templeton's approach is seen as a cautious but strategic step in adapting to the tokenized finance era. The firm is prioritizing responsible innovation, ensuring that new capabilities are built on a foundation of regulatory compliance and investor trust according to industry analysis.

The firm's Head of Institutional Liquidity, Matt Jones, emphasized the importance of balancing innovation with risk management. Being early in the market matters only if it is done responsibly. These updates demonstrate how institutions can adopt tokenized infrastructure with products they already know according to market participants.

Market participants are also watching for regulatory developments. The GENIUS Act, which was signed into law in July 2025, sets standards for assets that can back regulated stablecoins. Franklin Templeton's updates align with these requirements, positioning the firm to support institutional clients in this evolving market as regulatory reports indicate.