Franklin Templeton expands tokenized collateral service to Bybit

Franklin Templeton is bringing its tokenized collateral program to Bybit, extending a service that lets institutional traders park yield-bearing assets with a regulated custodian while still using them as trading collateral.

The move follows a similar arrangement with Binance that went live on February 11, 2026. Two of the world’s largest crypto exchanges now accept Franklin Templeton’s BENJI tokens as off-exchange collateral.

How the Benji model actually works

Franklin Templeton’s Benji platform issues BENJI tokens on a strict one-to-one ratio with shares in its Franklin OnChain U.S. Government Money Fund, known as FOBXX.

The institution hands over its assets, receives a token that proves ownership, and that token can then be posted as collateral at a trading venue without the assets ever leaving a regulated custodian. The trader earns yield the whole time.

Traditional collateral arrangements typically require moving assets onto an exchange, which creates counterparty risk and earns nothing. The Benji structure keeps assets with a third-party custodian, keeps them earning, and keeps them legally protected. Roger Bayston, Franklin Templeton’s Head of Digital Assets, has framed this as the core value proposition: maintaining custody and regulatory protections while offering yield-bearing collateral.

Benji currently runs on multiple blockchains, including Stellar and Ethereum, giving institutions flexibility in how they interact with the platform.

$2 billion in AUM and a green light from the SEC

The Bybit expansion arrives as Franklin Templeton’s tokenized offerings cross $2 billion in assets under management.

In August 2026, the SEC issued a no-action letter permitting Franklin Templeton’s registered funds to use tokenized FOBXX and BENJI tokens for cash and collateral management. A no-action letter is not a full endorsement, but in regulatory terms it is the SEC saying it will not take enforcement action, which is close enough to a green light for most compliance teams.

What the Bybit expansion signals for the market

Bybit ranks among the largest derivatives exchanges globally, with a user base heavily skewed toward professional and institutional traders. Bringing BENJI collateral to Bybit means the product is now accessible to a trading population that genuinely needs efficient collateral solutions.

Today, crypto traders posting collateral typically use stablecoins or other crypto assets, which carry price volatility or de-peg risk. A tokenized U.S. government money market fund is, by comparison, about as stable as collateral gets.

For Bybit specifically, accepting regulated, yield-bearing tokenized collateral is a credibility move as much as a product feature. The exchange has worked to rebuild its institutional reputation, and a partnership with a 75-year-old asset manager carrying more than $1.5 trillion in traditional assets under management is not a subtle signal about the direction it wants to go.