Asset management giant Franklin Templeton, which manages $1.6 trillion in assets, on Tuesday, Jan. 13, updated two institutional money market funds to make them easier to use with stablecoins and blockchain-based financial systems.
The funds are managed by Western Asset, a Franklin Templeton affiliate, and remain traditional, Securities and Exchange Commission (SEC)–registered Rule 2a-7 money market funds, meaning they must meet strict liquidity, credit quality, and risk requirements.
One fund, the Western Asset Institutional Treasury Obligations Fund, has been updated so it can be used by stablecoin issuers as part of their reserves. The fund now invests only in U.S. Treasuries with maturities of 93 days or less, as well as Treasury-backed repurchase agreements, to meet the requirements of the GENIUS Act.
The second fund, the Western Asset Institutional Treasury Reserves Fund, is a Treasury-only money market fund. While the fund itself has not changed, it now offers a digital share class that allows approved distributors to use blockchain-based platforms, a Franklin Templeton spokesperson told The Defiant.
Neither fund is tokenized, the spokesperson emphasized – instead, the changes focus on how the funds are used and distributed.
“This marks a real shift in how money markets connect to digital finance,” Roger Bayston, head of digital assets at Franklin Templeton, told The Defiant. “By updating existing SEC-registered funds to support stablecoin reserves and blockchain-based distribution, we are turning trusted liquidity products into usable infrastructure for tokenized markets.”
Bayston added that the passage of the GENIUS Act last year gave asset managers a clear regulatory framework to work within. “We moved quickly to align our funds so institutions can operate on-chain with the same standards they expect in traditional markets,” he said. “This is how regulated cash becomes part of the digital financial system.”
The spokesperson explained that the two funds are designed for different users. Stablecoin issuers may use the Treasury Obligations fund for reserve management, while institutional distributors can use the Treasury Reserves fund to offer traditional money market funds through blockchain-based platforms.
The move comes amid a broader push by Franklin Templeton and other traditional asset managers into crypto-related infrastructure. Most recently, the state of Wyoming launched the first U.S. state-issued stablecoin, FRNT, a dollar-backed token managed by Franklin Templeton.