Bybit and Franklin Templeton Enable On-Chain Collateralization
Bybit and Franklin Templeton announced a strategic partnership: qualified clients can use the latter's tokenized money market fund shares as over-the-counter collateral to exchange for USDT or USDC trading limits on the exchange, while the shares themselves do not transfer to the exchange and continue to accrue interest.
The shares are issued by Franklin Templeton's own accounting and transfer platform Benji, corresponding to the on-chain U.S. government money market fund FOBXX, which had a net asset value of approximately $686.6 million as of August 31, with one share corresponding to one BENJI. The collateral is managed by institutional custodian ByCustody, with Bybit only mirroring the value. The latest annualized yield over seven days is approximately 3.7%. The announcement did not disclose the eligible jurisdictions, discount rates, loan-to-value ratios, or default handling details.
Franklin Templeton manages approximately $17 trillion to $17.9 trillion. Bybit claims to have over 80 million global users. The two parties also plan to launch tokenized wealth products for wallet holders on Bybit and the Mantle chain, with details to be announced separately, and stated they will conduct retail investor education. Similar over-the-counter collateralization has previously been implemented on platforms like Binance through Ceffu custody.
The structure is a combination of staking and mirroring, not transferring funds into a hot wallet. Clients earn interest on the money market fund while using stablecoin limits for trading, with counterparty risk shifting from the exchange-managed assets to the collateral rights in the custody account. Yoyee Wang, head of Bybit's global RWA and traditional finance, stated that institutions require the same capital efficiency as traditional markets; Sandy Kaul, head of digital assets at Franklin Templeton, emphasized the need to utilize regulated, income-generating assets in the digital market.
The buy side consists of institutions seeking trading leverage while reluctant to hand over cash assets to exchanges; the sell side includes asset management firms and exchanges that need to make tokenized fund shares usable as collateral. Funds are shifting from idle cash and stablecoin inventories to "yield-bearing collateral + stablecoin limits." The driving force is the transition of RWA from holding to leverage. Beneficiaries include Benji share holders, Bybit trading volume, and Mantle distribution; those under pressure are desks that only accept stablecoins or Bitcoin as collateral, and clients who must submit assets to the exchange to open positions.
Source: Public Information
ABAB AI Insight
Under Ben Zhou's leadership, Bybit has developed a second balance sheet for custody, over-the-counter settlement, and traditional asset interfaces outside the exchange. Franklin Templeton has moved its money market fund onto its own on-chain transfer system, Benji, first addressing accounting issues, then tackling whether the same asset can simultaneously earn interest and be used for trading. The two sides converge not by issuing a new token, but by writing existing fund shares as collateral recognized by the exchange.
The capital path is: fund assets remain under regulated custody, and the exchange only recognizes mirrored limits, with stablecoin liquidity flowing from Bybit's order book to institutions holding FOBXX. The motivation is that institutional cash has a yield floor, and pure stablecoin collateral equates to forfeiting around 3.7% in coupon; asset management firms aim to upgrade the $680 million on-chain money market fund from "viewable and transferable" to "borrowable." Resource transfer occurs between custody accounts, stablecoin credit lines, and Mantle retail products.
Similar structures exist with Binance and Ceffu implementing the same Benji collateral, as well as traditional markets using government bonds for tripartite repurchase to leverage trading desks. The industry is transitioning from tokenization at the display layer to the collateral layer: starting with money market funds, then discussing broader wealth products. The final pricing power has yet to be determined between fund companies and exchanges.
This represents a restructuring of the industry chain. Yield-bearing cash, custody, mirrored credit, and perpetual contracts are connected into one line, with the mechanism being: institutions cannot accept counterparties consuming principal, nor can they accept collateral that does not earn interest, thus retaining ownership in the fund registration system while mirroring usage rights into the exchange. The completion of this restructuring is not marked by press releases, but by discount rates, jurisdictions, and default terms being written into executable documents.
ABAB News · Cognitive Laws
Assets must not be submitted to the exchange to earn interest while opening positions.
The next step for tokenization is not display, but becoming collateral.
Whoever controls the mirrored limits re-prices idle cash.