Just over a year ago, Franklin Templeton launched its OnChain U.S. Government Money Fund, which has now surpassed $270 million in assets under management (AUM) for the tokenized fund. It’s the first U.S. registered fund to use a public blockchain (Stellar) to record transactions and shareholdings.
Franklin Templeton is a major player in the asset management sector, with $1.4 trillion in assets under management. Most of the portfolio assets are invested in the debt of Federal Home Loan banks.
“We believe that blockchain technologies have the potential to reshape the investment management industry by providing greater transparency and lower operational costs for traditional financial products,” said Roger Bayston, Head of Digital Assets at Franklin Templeton .” Blockchains like Stellar’s are important to the investment process of the future, and assets built on blockchain rails, like the Franklin OnChain U.S. Government Money Fund, will eventually be interoperable with the rest of the digital asset ecosystem.”
A Franklin subsidiary has launched Benji, a mobile app for managing investments in cryptocurrencies and tokenized securities such as this fund. Each share in the fund is represented by one Benji token.
Many blockchain protocols have significant treasury assets to invest. The main options are to park them in crypto or stablecoins. This government money market fund represents another option, with the peace of mind of a high profile asset manager who is unlikely to run off with their funds. Hence Stellar has chosen to invest some of its treasury in the fund.
Because of the lack of return on stablecoins and high inflation, there’s increasing demand for alternative assets, with several startups eyeing or launching tokenized Treasuries or money market funds. One example is Ondo Finance which is launching a money market fund following up on its tokenized treasuries which have attracted $68.5 million in funds.
Meanwhile, asset managers are both investing in tokenized securities and looking to tokenize their funds. KKR had one of its funds partly tokenized on a public blockchain by a third party. Deutsche Bank, abrdn, Apollo and Hamilton Lane are all testing the tokenization waters.
In Europe, Union Investment is one of the most prolific investors in digital securities, having invested in two European Investment Bank bonds and the Siemen digital bond.