Investment firm Franklin Templeton brings tokenized money market funds to Bybit as collateral

Bybit has added Franklin Templeton’s tokenized money market fund shares to its off-exchange collateral programme. The practical change is simple: eligible users may pledge the shares to borrow USDT or USDC while continuing to earn yield on the underlying assets.

The underlying holdings do not need to move to Bybit. Regulated custodian ByCustody keeps them off-exchange, while Bybit mirrors their value inside its trading environment. That mirrored value can support trading liquidity, although the source does not explain the margin rules, liquidation process or borrowing costs.

Why the collateral stays off Bybit

Tokenized money market shares represent an interest-bearing fund. Investors generally earn a return because the underlying assets remain invested. The design here separates that return from their use in crypto trading.

A user can pledge the shares as collateral, borrow stablecoins and use them in the trading environment. The shares continue to earn a yield based on the fund, while the stablecoin proceeds provide liquid buying power.

It’s a familiar collateral model with one unusual feature. The fund assets remain at ByCustody rather than being transferred to Bybit. Bybit only mirrors their value for trading purposes, according to CoinDesk’s report.

The shares are issued through Benji, Franklin Templeton’s blockchain-integrated record-keeping and transfer platform. Benji’s latest seven-day rate puts the annualized yield at 3.7%, though that figure can change and does not describe the total cost of the Bybit arrangement.

What’s live, and what isn’t clear

The announcement does not confirm whether the service is already available to every Bybit user. It may be rolling out in stages or limited to selected accounts, but the source does not say which.

The important terms are also missing:

• Which users and wallet holders qualify.
• Which Benji money market share class is accepted.
• The collateral haircuts, leverage and credit limits.
• The cost of borrowing USDT or USDC.
• What happens if collateral falls enough to trigger a liquidation.

Those details determine whether the service is useful for a particular trader. Without them, the product is best understood as an announced extension of an existing collateral model, rather than a fully specified trading offer.

The tokenized shares represent about $686 million in net assets, according to Monday’s press release cited by CoinDesk. The report does not provide a fund-by-fund breakdown or show how much has been deposited or borrowed under Franklin Templeton’s earlier exchange partnerships.

A wider push for collateral outside exchanges

Bybit is not the first venue to offer Franklin Templeton’s tokenized money market funds as off-exchange collateral. Customers of Binance and OKX already have access to them, though their usage is also unconfirmed.

Other companies are testing similar arrangements. Crypto.com and Deribit let eligible institutional and professional users use BlackRock’s BUIDL fund to back trades, including derivatives positions. The common idea is to let an asset serve two purposes at once: earn its underlying return and support trading activity elsewhere.

Franklin Templeton’s digital assets chief, Sandy Kaul, described the aim in an interview with CoinDesk:

“So now I'm able to really look across the top exchanges and be able as an investor to use my collateral more optimally while earning yield on it.”

For Bybit users, the appeal is the separation of custody and trading. The fund holdings stay with ByCustody, the tokenized shares supply mirrored collateral value, and the borrowed stablecoins supply trading liquidity. The missing eligibility rules and risk parameters will show how useful that setup is in practice.