Yesterday at the Consensus event, Franklin Templeton‘s CEO Jenny Johnson discussed how the asset manager is already taking advantage of blockchain, the benefits of blockchain for the fund management sector, and the potential she sees in NFTs.
With some banks teetering and others failing to pass on higher interest rates to depositors, Franklin Templeton and other asset managers have benefited as bank deposits have migrated to money market funds.
But Franklin Templeton, with $1.4 trillion in assets under management (AUM), has also profited from last year’s decision to launch a tokenized money market fund on the Stellar public blockchain, which has surpassed $270 million in AUM. Now crypto firms struggling to find U.S. bank accounts have an alternative place to park their funds. Yesterday it announced the fund is also available on Polygon, the Ethereum sidechain. It is talking to MakerDAO about investing some of its stablecoin reserves in the fund.
While the current offering is a U.S. fund, Franklin Templeton is also exploring a tokenized global fund.
More blockchain than crypto
As much as Johnson is a fan of crypto, she’s a bigger fan of blockchain.
“Bitcoin is the greatest distraction from the greatest disruption that is coming to financial services, which is blockchain,” she said.
That’s partly because of her belief that if Bitcoin gets too big, the government will limit its use because of the importance of currencies as an economic lever.
She spoke about blockchain’s ability to enable immediate settlement and remove the need for reconciliations.
“If you think about blockchain, it does three things. It allows a payment mechanism. It allows a smart contract, and it allows a general ledger. So that’s going to take out the frictional costs in a transaction,” said Johnson.
And lower costs enable new types of transactions. She gave the example of Rihanna selling NFTs which include a fractional share of royalties from a popular track. Johnson sees that as an example of not just fandom but democratizing investment. Plus, Rihanna’s royalties are not correlated with the rest of the financial markets.
Zooming out, Franklin Templeton views its main value as making active investment decisions on behalf of clients. Potentially A.I. could be a threat to that. But not so much DLT. “Blockchain just helps us make that (investment) much more efficiently and actually opens up many more instruments in which we can invest,” she said.