Bybit and Franklin Templeton have launched a collaboration that allows eligible institutional clients to use tokenized money market fund shares as off-exchange collateral for trading on Bybit. The shares are issued through Benji, Franklin Templeton’s blockchain-integrated recordkeeping and transfer agency platform.
Under the arrangement, clients pledge the fund shares through ByCustody, Bybit’s institutional custody platform, and receive USDT or USDC trading credit lines on the exchange. The assets remain in regulated custody rather than being posted directly to the trading venue, while their value is reflected inside Bybit’s trading environment.
Collateral stays outside the exchange
The structure is designed to let institutions deploy fund holdings as margin without transferring those assets onto the exchange itself. Clients can continue earning the yield generated by the money market fund shares even while using them to support trading positions on Bybit.
Keeping the pledged assets off-exchange is intended to reduce counterparty exposure. If an exchange were to fail or suffer a hack, collateral held separately in regulated custody would be less exposed than assets parked directly on the venue.
Benji expands its role in tokenized finance
Franklin Templeton’s Benji platform sits at the center of the arrangement because it issues the tokenized fund shares being accepted as collateral. The new setup extends the use of those shares beyond investment holding and into exchange trading infrastructure.
The model follows an earlier off-exchange collateral program between Franklin Templeton and Binance. Expanding the same concept to Bybit suggests a broader push to position Benji-issued assets as a standard form of collateral in tokenized markets.
Broader plans include investment products and education
The companies said the partnership is expected to go beyond collateral management. They outlined plans for a tokenized wealth product to be offered on the Bybit exchange and on the Mantle chain, aimed at providing access to Franklin Templeton investment strategies.
They also said education initiatives are planned around goals-based investing and diversification for wallet-based investors. No separate launch timetable or product specifications were included in the announcement.
Key terms remain undisclosed
Several practical details have not been made public. The companies did not specify which money market fund shares will be accepted, which institutional clients will qualify, or what haircut will be applied when converting pledged shares into trading credit.
For now, the confirmed next step is the rollout of the collateral arrangement for eligible institutions, with further details on the planned tokenized wealth product to be announced separately.
Source: www.blockhead.co