Franklin Templeton’s tokenized money fund launches on Arbitrum

According to an Aug. 8 announcement, Franklin Templeton is launching its tokenized money fund on the Arbitrum network in what the asset manager describes as “an ongoing effort to bridge the gap between traditional and decentralized finance.” 

Created in 2021, the Franklin OnChain US Government Money Fund (FOBXX) is accessible through Franklin Templeton’s Benji Investments platform. Users can now choose to acquire and hold the fund’s tokenized shares on Arbitrum, along with other networks such as Stellar and Polygon.

Money funds generate low-risk yields for investors by holding highly liquid assets such as short-dated Treasury bills and commercial paper. Franklin Templeton’s FOBXX currently has net assets of approximately $420 million and has been generating annualized returns of about 5.25% as of June 2024.

The partnership is a significant win for Arbitrum because it means that United States regulators consider Arbitrum’s public ledger to be a legitimate instrument for financial recordkeeping.

Arbitrum is Ethereum’s most popular Layer-2 scaling solution, with a total value locked (TVL) of approximately $14 billion, according to L2Beat.

“We are currently the only product with the ability to use public distributed ledger technologies (DLTs) for official transaction record-keeping,” Roger Bayston, Franklin Templeton’s head of digital assets, told Cointelegraph in July.

Launching FOBXX on Arbitrum “aligns with our mission to provide scalable and efficient solutions for the financial sector,” Steven Goldfeder, CEO and co-founder of Arbitrum-developer Offchain Labs, said in a statement.

The Arbitrum launch marks Franklin Templeton’s latest effort to enhance the accessibility of its tokenized real-world assets (RWAs). The asset manager has plans to expand to new chains and to make its RWAs accessible to user-managed wallets, according to Bayston.

“Expanding into the Arbitrum ecosystem is an important step on our journey,” Bayston said in a statement.