TL;DR
- Bybit and Franklin Templeton have launched an off-exchange collateral program for eligible institutional clients.
- Tokenized money-market fund shares issued through Franklin Templeton’s Benji platform can be pledged while clients trade on Bybit.
- The structure lets institutions keep collateral in regulated custody rather than moving the assets directly onto the exchange.
Bybit is giving institutional traders a way to use tokenized fund shares as collateral without depositing those assets directly onto the exchange.
The crypto platform announced a strategic collaboration with Franklin Templeton on September 28, starting with an off-exchange collateral program built around tokenized money-market fund shares issued through Franklin Templeton’s Benji platform.
Collateral Can Stay Outside The Exchange
The structure is aimed at eligible institutional clients.
Rather than transferring all of their collateral into an exchange account, participants can hold qualifying tokenized fund shares through the supported custody structure and pledge them against trading activity on Bybit.
That is important for large investors.
Keeping assets off an exchange can reduce counterparty exposure and allow collateral to continue generating the yield associated with the underlying money-market fund.
Bybit gains access to the collateral value without needing the institution to turn the entire position into cash or stablecoins first.
Franklin Templeton’s Benji platform provides the blockchain-integrated recordkeeping and transfer infrastructure for the tokenized fund shares.
Tokenized Funds Are Becoming Trading Infrastructure
Tokenized money-market funds initially attracted attention as a way to hold Treasury-like assets onchain.
Their next use may be more consequential.
They can become collateral.
A fund share that earns yield while sitting idle is useful.
A fund share that can simultaneously support a trading position becomes part of market infrastructure.
That is the direction several crypto and traditional-finance companies are now pursuing.
The Bybit integration also shows why off-exchange collateral has become increasingly important after a series of large exchange failures and security incidents.
Institutional traders want access to liquidity and derivatives markets.
They do not necessarily want every dollar of collateral sitting inside the trading venue itself.
Separating custody from execution can reduce that concentration of risk.
The collaboration extends beyond the initial collateral program.
Bybit and Franklin Templeton say they also plan to explore additional tokenized investment and yield products for wallet-based users.
Those future products should not be confused with what is live today.
The concrete first step is narrower and more institutional.
Eligible clients can use tokenized money-market fund shares as off-exchange collateral while trading on Bybit.
That turns tokenization from something investors merely hold into something they can actively finance against.
This article was written by the News Desk and edited by Samuel Rae.
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