Franklin Templeton retrofits money market funds for tokenization

Franklin Templeton has updated two institutional money market funds managed by its affiliate Western Asset Management to be eligible for tokenized finance.

The asset manager said the changes make the funds usable in two major segments: supporting regulated stablecoin reserves under new legal crypocurrency frameworks and serving as distribution products across blockchain-enabled platforms.

"Traditional funds are already beginning to move on-chain, so rather than question their ability, our focus is to make them more accessible and useful by many," said Roger Bayston, Head of Digital Assets at Franklin Templeton.

The updates apply to two existing traditional Rule 2a-7 government money market funds, the firm added.

The Western Asset Institutional Treasury Obligations Fund ($LUIXX) has been revised to align with the reserve requirements of the GENIUS Act, the federal stablecoin framework signed into law in July 2025, and now invests exclusively in U.S. Treasuries with maturities of 93 days or less. The release noted the stablecoin market has surpassed $310 billion in total supply and it is expected to reach approximately 2 trillion by 2030.

The Western Asset Institutional Treasury Reserves Fund ($DIGXX) is also included in the retrofit update.

The company said the changes are intended to help Western Asset continue meeting the needs of institutional clients and distribution partners as the market for delivery of digital products evolves.

The Recap

• Franklin Templeton made two Western Asset funds tokenization-eligible.
• One fund now invests only in U.S. Treasuries with 93-day maturities.
• Funds positioned for stablecoin reserves and blockchain distribution use.