From Experiment to System: Why Franklin Templeton Officially Supports On-Chain Cash and Stablecoin Reserves

Global asset management giant Franklin Templeton recently announced that it is transforming two of its institutional money market funds into products that support stablecoin reserves and on-chain cash. This is not a small experimental move but a sign that traditional regulated financial products are systematically integrating with digital infrastructure. It reflects institutional investors’ real needs for faster settlement, higher transparency, and 24/7 fund management, as well as a new phase of integration between traditional finance and blockchain.

Specific Adjustments to the Two Funds

Franklin Templeton has upgraded the functionality of its two institutional funds:

• Western Asset Institutional Treasury Obligations Fund (LUIXX): Revised to comply with the GENIUS Act, holding short-term U.S. Treasuries, and can serve as a reserve tool for stablecoins
• Western Asset Institutional Treasury Reserves Fund (DIGXX): Launched a new digital institutional share class, allowing distribution and transfer on blockchain platforms, enabling on-chain trading and settlement

Both funds are institutional-level money market funds with large management scales, previously mainly targeted at traditional institutional investors. Now that they have blockchain capabilities, institutional investors can settle directly on-chain without relying on traditional clearing systems.

What Real Problems Are Being Solved

On the surface, this is just an addition of product features. But the deeper logic is that Franklin Templeton is responding to the real pain points of institutional investors:

Settlement Speed Bottleneck

Traditional financial clearing systems often require T+2 or longer. During periods of market volatility, such delays can incur significant costs. On-chain settlement can achieve near-instant transfers, which is crucial for large institutions managing liquidity.

Transparency and Audit Costs

Immutable on-chain records provide clearer data foundations for compliance, auditing, and risk control. In the complex clearing chains of traditional finance, information gaps and reconciliation costs are often underestimated. The transparency of on-chain data can significantly reduce operational uncertainties for large institutions.

24/7 Trading Needs

Traditional banking systems are limited by business hours, and cross-time-zone fund management often requires waiting. Blockchain networks operate 24/7, allowing institutional investors to settle at any time, which is vital for global asset allocation.

Critical Point of Regulatory Framework

The implementation of this initiative is backed by an improved regulatory environment. The GENIUS Act provides a clear framework for stablecoin reserve management, disclosure, and compliance responsibilities. This gives large institutions like Franklin Templeton enough legal certainty to adopt related technologies within predictable boundaries.

In other words, it’s not that Franklin Templeton suddenly decided to embrace blockchain, but that regulators finally provided clear rules, allowing institutions to participate with confidence. This also explains why this is not a small experimental project but a direct overhaul of existing large-scale institutional funds.

Larger Industry Signal

According to the latest news, Franklin Templeton’s move is not isolated. Other traditional financial institutions are also accelerating their deployment:

• Strive Asset Management has acquired over 12,000 Bitcoin, becoming a major holder
• Giants like JPMorgan Chase are exploring on-chain financial infrastructure
• The entire RWA (Real-World Asset) tokenization track is expanding

All these actions point in the same direction: traditional finance is systematically moving toward digitalization. From tokenized bonds to on-chain money market funds, from corporate reserves in Bitcoin to on-chain cash, the digital transformation of institutional finance is no longer a future concept but an ongoing process.

Summary

Franklin Templeton’s move marks an important turning point. It indicates that traditional finance no longer views blockchain as a marginal or experimental technology but is beginning to systematically incorporate it into core products and operations. Behind this are genuine business needs, clear regulatory frameworks, and synchronized industry actions.

For the crypto market, this means the pathway for institutional capital entry is being paved. From compliance and liquidity to technological infrastructure, the integration of traditional finance and blockchain is entering deep waters. The future of the RWA sector may arrive faster than most people imagine.