Bybit Accepts Franklin Templeton’s Tokenized Money Fund Shares as Off-Exchange Collateral

Bybit and Franklin Templeton Partner to Offer Tokenized Money‑Fund Shares as Off‑Exchange Collateral

In a move that blends traditional finance with the emerging world of tokenization, Bybit has announced that eligible clients can now use shares of Franklin Templeton’s tokenized money‑market funds as collateral for borrowing USDT or USDC on the exchange. The partnership leverages Franklin Templeton’s Benji platform—a blockchain‑based record‑keeping and transfer agency—and Bybit’s custody solution, ByCustody, to keep the assets off‑exchange while they continue to earn yield.

How the Collateral Works

Clients pledge their tokenized fund shares through ByCustody, which holds the tokens in a secure custody environment. In return, Bybit issues a credit line in either USDT or USDC that the trader can use for spot or futures positions. The key benefit is that the tokens never move to Bybit’s trading ledger; instead, the exchange mirrors their value internally. This arrangement preserves the yield stream from the money‑market fund and reduces counterparty exposure for the trader.

Franklin Templeton’s Benji platform ensures that the tokenized shares are fully compliant with regulatory standards, while Bybit’s infrastructure provides the liquidity and speed that traders expect from a major crypto exchange. The collaboration also signals a broader trend: exchanges are increasingly looking to integrate regulated, yield‑bearing assets as collateral to expand borrowing options for institutional and high‑net‑worth clients.

A Precedent in the Space

Bybit is not the first exchange to explore off‑exchange collateral. In April 2025, OKX and Standard Chartered launched a pilot that accepted Franklin Templeton’s tokenized money‑market funds, with the bank acting as custodian. Earlier, Binance partnered with Ceffu to offer a similar program for institutional clients. Bybit’s approach builds on these pilots by offering a more streamlined custody process and by extending the collateral pool to retail traders who meet eligibility criteria.

Beyond Collateral: Tokenized Wealth Products

Franklin Templeton is also planning a tokenized wealth product that will be available on both Bybit and the Mantle chain. The product targets investors who hold assets in crypto wallets, providing a bridge between traditional wealth management and decentralized finance. While details are still forthcoming, the partnership hints at a future where tokenized funds can be used not only as collateral but also as core investment vehicles.

Practical Takeaways for Traders

1. Yield‑Bearing Collateral – Tokenized money‑market fund shares continue to earn yield while serving as collateral, offering a dual benefit of capital efficiency and passive income.
2. Reduced Counterparty Risk – Keeping the assets off‑exchange limits exposure to the exchange’s operational risk.
3. Broader Access – Eligible clients—including institutional and high‑net‑worth individuals—can now access borrowing options without needing to liquidate traditional holdings.
4. Future Opportunities – The planned tokenized wealth product could open new avenues for portfolio diversification within the crypto ecosystem.

Bybit’s collaboration with Franklin Templeton represents a significant step toward integrating regulated, yield‑bearing assets into the crypto trading ecosystem. As more exchanges adopt similar models, traders can expect greater flexibility and security when leveraging tokenized securities for margin and leverage.

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TL;DR: Bybit now lets eligible clients borrow USDT or USDC using Franklin Templeton’s tokenized money‑market fund shares as off‑exchange collateral, keeping the assets in custody and earning yield while reducing counterparty risk.